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  • FIRST POST
    • C8LNJ
    • By C8LNJ 5th Mar 18, 8:30 PM
    • 36Posts
    • 12Thanks
    C8LNJ
    Car paid off or sink more into mortgage?
    • #1
    • 5th Mar 18, 8:30 PM
    Car paid off or sink more into mortgage? 5th Mar 18 at 8:30 PM
    The family car has come to the end of its finance term and it's still tickin all the boxes so I plan to keep it, probably for another 3yrs.

    I have the gfv amount 10k set aside to buy it, however would I be better off financially putting this into my mortgage and getting another loan for the car?

    My mortgage is 1.99% 14yr term.

    Personal loan would cost 478 over 3yrs at 3.1% payments work out similar to now.

    Where is the smart money? No car payment or make a dent on the mortgage? With no car payment I'm around 300 a month better off which I could repay I monthly instead of all up front I guess? Is anyone clued up?
Page 1
    • wishingthemortgaheaway
    • By wishingthemortgaheaway 5th Mar 18, 9:05 PM
    • 1,324 Posts
    • 6,174 Thanks
    wishingthemortgaheaway
    • #2
    • 5th Mar 18, 9:05 PM
    • #2
    • 5th Mar 18, 9:05 PM
    I'm sure many many people round here are more knowledgeable than I. But I would say.
    1) pay off the car with cash. A loan with a higher interest rate than your mortgage seems not so sensible to me.
    2) think about how you are going to pay for your next car in 3 years time.

    If it was me, I'd pay the car off in cash then continue to put aside the monthly payments in a high interest or fixed term account so that, when I come to replace the car, I would have the cash to pay for it outright rather than taking on more debt.
    If you've been paying the car loan & saving for the final payment then you may be able to save some money and over pay the mortgage by some too.
    I guess it depends on the figures.
    The 100 payment countdown (each payment = 400) 2018 Starts at 13/100 o/s 34,750.
    Jan 18 14/100 Feb 15/100 March 18/100 April 19/100
    Term Mortgage free date: October 2029 Current mortgage free date: April 2025 March 2024 Jan 2024
    MFW 2018 Challenge Member #162 1600ish/2,500
    • Tarambor
    • By Tarambor 5th Mar 18, 9:17 PM
    • 2,850 Posts
    • 2,059 Thanks
    Tarambor
    • #3
    • 5th Mar 18, 9:17 PM
    • #3
    • 5th Mar 18, 9:17 PM
    Whatever has the higher interest rate gets your money so if a loan is more than the mortgage then you pay off the loan/don't get it. If your savings interest is higher than the mortgage you put the money in the savings instead of paying off a lump of the mortgage.
    • C8LNJ
    • By C8LNJ 5th Mar 18, 9:34 PM
    • 36 Posts
    • 12 Thanks
    C8LNJ
    • #4
    • 5th Mar 18, 9:34 PM
    • #4
    • 5th Mar 18, 9:34 PM
    Thanks for the replies.

    I am very motivated towards getting rid of the mortgage as quickly as possible.

    I see it as the personal loan will cost me 480 for the term. But overpaying will save thousands over the remaining term!?

    Show me how I'm wrong and not looking at this correctly?
    • Old Git
    • By Old Git 6th Mar 18, 2:51 AM
    • 4,295 Posts
    • 3,740 Thanks
    Old Git
    • #5
    • 6th Mar 18, 2:51 AM
    • #5
    • 6th Mar 18, 2:51 AM
    I had a similar dilemma recently .Do I clear a loan or overpay the mortgage. The mortgage is a secured loan the other loan wasn't.

    Loan=3% would be clear in 18 months .
    Mortgage =1.97% until July but another 10 years to run.

    I cleared the loan at 3%
    I paid 5000 of the mortgage I kept the term at 10 years.The mortgage payment went down 44.
    I then increased the mortgage payments to 40 more than I had been paying for the mortgage and the loan.
    "Do not regret growing older, it's a privilege denied to many"
    • wishingthemortgaheaway
    • By wishingthemortgaheaway 6th Mar 18, 6:03 AM
    • 1,324 Posts
    • 6,174 Thanks
    wishingthemortgaheaway
    • #6
    • 6th Mar 18, 6:03 AM
    • #6
    • 6th Mar 18, 6:03 AM
    A 10k loan at 3% over 3 years would cost 290 a month, repaying about 10.5k

    On a 100k mortgage balance with 14 years left, at 1.99% a 10k overpayment now would reduce the term by 1 year 7 months and save approx 3k in interest (although the 'benefit' would be reduced to 2.5k as you'll be paying 500 interest on the loan.)

    Paying the 10k to the car cash and putting the 290 a month 'would have been a car payment' as a monthly overpayment for the remaining life of your mortgage would reduce the term by 4 years 7 months and save 4.9k in interest.

    Final scenario:
    Pay off the car, put the 290 a month in a 5% account for 3 years earn 825 in interest.
    The 100 payment countdown (each payment = 400) 2018 Starts at 13/100 o/s 34,750.
    Jan 18 14/100 Feb 15/100 March 18/100 April 19/100
    Term Mortgage free date: October 2029 Current mortgage free date: April 2025 March 2024 Jan 2024
    MFW 2018 Challenge Member #162 1600ish/2,500
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