I hopped on over to the Bankrate Auto Loan Calculator and plugged in the following information:
Loan Amount: $25,000
Interest Rate: 5.95%
Term: 72 months (6 years)
I then ran the numbers and checked out the amortization table for the loan:
- As of June, 2007, I should have paid about $2800 in interest
- For the entire loan, had I only paid the minimum payment, I would have paid almost $4800 in total interest!
- Therefore, I saved at least $2,000 in interest by paying off early
I say “at least $2,000”, because since I paid an amortized loan off early, I actually paid less than the $2800 in interest. I really don’t know how much I paid, but I do know that at most, this car purchase, with negative equity, interest, taxes, tags, etc., cost us almost $30,000! How stupid! And this was for a cheap, plastic, 4-cylinder Chevy Malibu! We could have kept our gas-guzzling VW Passat GLX, with its premium fuel requirement, and saved the $8,000 we lost on the trade-in.
But we didn’t, and we have to live with that stupid, stupid mistake from two and a half years ago. But now the loan is paid off, and we’re moving onto our next debt…
$10,000 in credit card debt!!!