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Paying off car vs student loans..
So we are on track with snowballing and I'm looking forward to next year. I had planned to pay off the majority of student loans in 2014 (they are actually in deferment still BUT I am not done with school as I was put on hospital bedrest during pregnancy and had to drop classes). I was hoping to defer them until next year and start paying large amounts, but my federal direct loans have come due so we are going to start making the monthly payments on them.
Now, i'm thinking MAYBE it would make more sense to get my car paid off before the student loans, because the payment is so much higher then we could throw that amount of money at the student loans as well.
Right now, we owe 23,134.56 on my car (2012 VW Passat) at 4.5% interest, we pay about $430/month
I have 1 direct loan
11,968.52 @ 6.8%,
and 3 sallie mae loans
2551.77 @1.79%,
2154.26 @ 6%
3403.24 @ 6.8%
Would MM pay of the car or student loans first?
We aren't interested in trading the car in or anything like that because we live in a rural area it already has 30k on it, and I have to travel to VCU in Richmond and Children's national in DC on a regular basis so I need something very reliable, my husband works 70 hours a week so I wouldn't have anyone to rescue us if we broke down.
Re: Paying off car vs student loans..
The car since tha t is a depreciating asset
Do you have several months of an e fund? If not you need it. If you do I'd pay off the car ASAP and then build savings to pay off Loan. Our fianc? guy doesn't recommend paying off stud loans unless you want to since interest so low BUT in your case your loans are large and have a high interest, can you get them lowered?
Every CPA I've had says the same thing. All my student loans are with 1 company and the interest rate is 2.85 fixed. I would also recommend paying off the car first.
Why do people always say this and does it work for anyone? All of my loans were government loans with the same interest rate, so even consolidating wouldn't have helped me. It may help OP since she has varying interest rates. I called my loan issuer and asked for my rates to be lowered and the guy almost laughed at me. I get slight discounts for paying online and on time. Has anyone actually gotten their rates lowered just by asking?
Anyways, that was a ramble. OP: I agree to pay off the car first bc it depreciates.
Yeah, my federal loans are not going to get lowered, and that's just the breaks depending on when they were taken out. I could consolidate, but I'd rather just pay off the high interest one with my sporadic extra payments.
I'd pay off your car. And not that you asked, but I'd worry about retirement more than any of those loans.
I don't know why it never occurred to me to to do the car before the student loans, but it popped in my head the other day & so I wanted to check into it.
We do plan to keep the car, forever pretty much. We are VW people and my husband can work on them, plus we are friends with a VW tech who does side work (cheap for us) so if it was something he couldn't do, or didn't have time to do we have him. But he has changed timing belts before so he can do most things.
We probably won't ever buy brand new again in the future though, this was our first 'new car' purchase! We saw a car JUST like ours (sunroof/nav, etc) with 3k miles on it for 6k less a few months after we bought our car--that kinda sucked!
Again, thanks so much. I always lurk here but will try to post more as well.