Paying off a $15,000 car loan in 9 months without using savings
After reading the articles everywhere on using 0% balance transfers to earn extra savings interest, or paying off debt, I had an epiphany.
We have a car loan with about $15,000 left. We bought the car almost 2 years ago for $25,000, and in the last 3 months, I’ve been steadily pounding away at the loan with bigger payments.
I have an agressive schedule to pay off the car by September of this year (2007). It is January. That’s roughly 9 months to pay off $15,000, AND without using any of our savings. Can we do it? Is there any way we can accelerate that with little risk?
YES! I’m going to call my Chase card to ask for an 8 month 0% balance transfer of $20,000. Why 20k when we only owe 15?
If I’m going to pay a transfer fee of $75, I might as well get the best out of it. I’ll put the other 5k into a 5-5.5% savings acount or 6-month CD and make $127 in interest (did I do that math right?).
The biggest savings though, is in the car loan interest. I’ll ignore lower the fact that my monthly interest payments will go down with each bigger payment for simple math.
Right now, we pay about $100 of our $416 payment in interest. In 9 months, that would be $900. That’s just shy of 3 months’ payments of actual principal. With a 0% loan, that’s $900 less that I have to budget, or about 1 month sooner that I pay off the loan. (Keep in mind that I did a lot of rounding off to keep it simple.)
Oh, and our car would be officially paid off, the title will be ours, and we would save some money in auto insurance because there is no lien on the car.
That is a SUBSTANTIAL savings, and I might use this plan next on our new Ridgeline. That loan has about $25k left, so I might need to do 2 or 3 0% loans to make it happen.
More from Cleverdude:
Personal Lending Group Shares 5 Key Things to Be Sure You Get Right on Your Loan Application
Review: National Consumer Panel â€“ Pure Awesomeness or Waste of Time?
Meal Delivery Service: Blue Apron Review
Which is Cheaper: Keg or Canned Beer?
Save Money on Water if You have a Pool (Utilities)