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  1. #1
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    Default Car loans and interest

    Hi all
    Just after some info/advice from anyone who knows about these sorts of things.

    I have car loan with a decent interest rate, it's 13.63% I think. I pay $300 a month plus $50 a month voluntarily. At tax time, I put the balance of my tax return on the loan in a lump sum. Last tax time I was almost 12 months ahead in payments.

    I am soon to lose the bulk of my income due to a changed situation. I need to know: if I find a way to pay the balance at tax time this year, and they give me a payout figure (I truly can't predict what it would be, I have no idea how the interest charge works), how will I be able to tell what I would save by finishing the loan then and not carrying it out to term (may 2016)? How can I find out or predict that figure and what the saving in interest would be by foreshortening the loan period by 3 years?

    Any help will be appreciated. I have the contract that says what the total figure of the loan would be (some 27k) so would I just subtract the amount I have paid including the payout figure from that number on the contract?

  2. #2
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    Bumpity bump

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    Your bank should be able to calculate it for you, sorry, I'm not sure either how it would work with interest, and early exit fees etc

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    The pay out figure is calculated on that day you ask not on the end amount you would of paid being (27k) they work it out like op said

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    Whoever you have finance through would actually be able to tell you a pay out figure so then you could work out what you would save/lose. Some finance companies would charge you an early termination fee so be sure to ask that. You would be saving yourself money in interest being 12months infront as you are charged interest on what you owe.

    Also your interest rate isn't a low one. My interest rate on my new car is 6.7% so over half of yours.

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    I'm not sure how it works exactly either OP but I think that's quite an extraordinary interest rate for a car loan. I paid off a car loan early years ago and there was a fee but it was well worth the interest saved. Perhaps try calling the people you have the loan through, they should be able to give you a payout figure.

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    We paid out our car loan a couple of years ago a few years early. It was a secured loan. When we paid out the balance we were charged a small fee maybe around $120 on top of the current balanced we paid out. Worked out heaps cheaper than letting the loan run to term

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    The interest rate seems a little high for a car, most are secured loans so the rate 'should' be a little more competitive. I would check about an early exit fee, paying early means you don't pay the extra interest which is why some have that fee. Obviously not aware of your full circumstances but if its not viable to pay it out at tax time could you shop around for a better interest rate to reduce the payment?


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    Quote Originally Posted by BabyG4 View Post

    Also your interest rate isn't a low one. My interest rate on my new car is 6.7% so over half of yours.
    Agreed - mine is through Toyota finance at 4%!

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    The car was bought in Darwin 4 years ago. There's no such thing as cheap in Darwin and I am well aware that the interest rate is higher than most would have been paying. However, refinancing through another agency isn't an option, so that's not what I am asking about. Thanks for the helpful input received.


 

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