Clearing a car loan

Wellard_2

Hi all,

I'm pretty new to Money Saving Expert, but I have heard Martin on BBC Radio 2. I would like to clear my existing car loan. It's due to finish in Feb 2008 but I want to clear it much sooner if possible.

I still have roughly £1300 to pay off my loan, and £1000 in savings. I've looked at the "Pay off debts with your savings" page and I am convinced I can clear the loan in two months by paying off one big chunk now and paying the rest the following payday.

I have one obstical in my way, the wife. I have tried to convince her that clearing the loan is a good thing and will save us money in the long run, but she wants to keep the money in the savings and wants to keep a 'safety net' (fyi, we are planning on moving to Canada within the next year or two). Clearing the loan now would mean we could put nearly £200 in savings a month, which will help us towards our goal for moving. Okay, we start with nothing again, but after 6 months we would have that £1000 back in our savings.

How do I go about convincing my wife that this is the right thing to do?

Regards,
Wellard.

Snaggles

Hi Wellard (love the name!)

Have you thought about maybe showing her this post? Or perhaps work out two budgets for the next 6 months, one showing how much you could save if you pay off the loan, and one showing how much you could save if you don't? The figures should speak for themselves.

Good luck x

chevalier

Put your current payments into the snowball calculator at www.whatsthecost.com this will show you how much interest you will pay over the rest of the term of the loan

then put in paying it off over the next two months, see how much interest you save

this might convince her
chev

Eager_Elephant

Hi wellard,

Have you contacted the finance company to see if you can pay off early and also what the penalty is?

It can come as quite a shock when the amount you think you owe does not come down by much because of penalties?

Have you got the agreement to check?

EE

scottishsuz

Hi Wellard,

Welcome to MSE :hello:

I'm about to do the very same thing as you, using all of my savings to pay off my car loan early. My back up plan is to get a credit card which will be locked in a drawer only to be used in dire circumstances. I'll use the money that I was paying towards my loan and put it back into my savings account so it starts to build up again.

Maybe a plan like this would reassure your wife?

Suz

Wellard_2

Thanks for your help all! I've managed to convince her that it's a good thing, and she now agrees. :jI've checked with the finance company in the past and they don't charge any penalty for finishing the loan early, in fact, it's cheaper than paying off the loan with monthly payments.

Once again, thanks for all your help! I'll be sure to come this way again should I have any further money worries!

Wellard