9k, would you pay off a truck loan or 2-3 major credit cards?
Friday, January 27th, 2012 at
09:38
Question by Lu: 9k, would you pay off a truck loan or 2-3 major credit cards?
If you had a vehicle loan for 9k and credit cards that equaled 11k, but you could pay off 2 if not 3 of them which would you spend the money on if you were given 9k to do either with and WHY??
Best answer:
Answer by xiaodao
Pay off whichever has the highest interest rates.
That usually is the credit card.
Know better? Leave your own answer in the comments!
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US $2,500.00
look at the interest rates… the ones with the higher rates should go first, they’ll cost more in the long term
First, I would make sure I was current in all of my payments. If so, I would pay off the credit cards because people are expected to take their time paying off things like truck loans. Credit card debt is never a happy experience. Good luck!!!
I would apply the money in order of which debt has the highest interest rate. It will save you money in the long run. Then apply the payments that use to go toward the high interest debt toward any remaining debt.
Keep paying more than minmums on the credit cards, pay car loan that payment per month.No need to pay off unless you have plenty to pay credit cards down or off.
credit cards can hav higher interest rates so I would go for them on first thought. But if they have 0% interest I would pay off the ruck first then pay down or off what ever CC was left. You can always cal the cc comanies and tell them that you will/are transfering your balance to a 0% CC if they refuse to give you that inerest rate. Most CC companies do not want you to leave them and will change it immediately when you talk of leaveing them.
Good luck
Usually, an auto loan has a much lower interest rate than most credit cards, but consider this – the average car loan is structured to be paid off over five years, whereas with high interest credit cards, you could could still be making payments on them long after your truck is in the junk yard. My advise is to pay off the credit cards first and only keep the lowest, fixed rate, no annual fee one (if you have one) for EMERGENCIES ONLY. If you have multiple cards, you may get tempted to use them, especially around the holidays. If your credit is good, see if your bank will issue you a credit card – their interest rates are usually way lower than “stand alone” credit card companies who thrive on high interest, minimum monthly payment deals.
As much as I hate the idea of paying the card companies…I would pay off your largest/highest interst rate card first. Get rid of the card balances as soon as you can b/c it’s a known fact that a person overpays that balance, with high interest charges, sometimes, 3-4X the amount of the original bill over time. I would leave the one with the smallest balance b/c you will probably pay that off in no time at all. With the car loan, it’s meant to be a bit of long term and as long as your rate on that is o.k., not to worry, you’ll get that done. Also if you come up on some large sum of money again you can pay that off then.
Good luck (well you already seem to have that)!
It’s all about the interest. Pay off whatever has the highest interest first. Another idea is, put your money somewhere else where it can make you money (stocks, mutual funds, CDs etc). It must have a higher return than what you are paying on you loans for it to work. Having someone else’s money work for you is awesome. You have to know what you are doing though. If you don’t feel comfortable doing this, then just pay off you loans with the highest interest first.
I would compare the interest rates on the truck loan, the 3 credit cards, and what the market is offering. If I could transfer a balance to a low rate, I would pay off all I could and transfer the remaining balance to the new low rate card. Otherwise, I would pay off each loan, from the highest rate to the lowest, which usually means paying off the credit cards.
The reason for this approach is to save the most on interest and you would apparently be able to eliminate 1 or 2 of the credit card payments alltogether, which will leave you more money each month to pay off the third card sooner.
Pay off the credit cards and don’t use them anymore unless you plan to pay the balance due when you get the bill. Interest rates are much higher on credit cards usually, and they are the worst debt you can have. If you use credit cards, pay the balance when due, do not allow them to charge you interest anymore. Learn to live within your means – no more accumulating credit card debt. Credit card debt destroys families and sends the wrong message to the children of people who abuse credit cards. Pay off monthly or don’t use them.