Car Loan Question

[Boblobla]

Alright. The Fiancee was hit from behind and her car is a write off. She is getting a cheque for 10.5k from the insurance company and there is 6.5k left on the loan. It is an open loan so there isn't a penalty for paying it off earlier but I am wondering if there is a benefit to paying it off early.

Will there be any sort of break on the interest? I don't really know how car loans work.

What is the advantage of paying 6500 in one lump sum rather than putting that money in a high interest savings account and slowly paying the loan off from there?

Should I just go into the bank? I always feel when I talk to account managers that I am being lied to right to my face and there is nothing I can do about it.

PLZ HELP ME.

[czure32]

Originally Posted by Boblobla

Will there be any sort of break on the interest? I don't really know how car loans work.

What is the advantage of paying 6500 in one lump sum rather than putting that money in a high interest savings account and slowly paying the loan off from there?

no special benefits or rate reductions by paying the loan down early
however by making a single lump sum payment you will end up saving money on interest.
you mention possibly putting the funds into a high interest savings account and continuing making the regular payments, but that will only be beneficial if you earn more in interest than what the loan accumulates between payments

[Sample00]

if there is a loan outstanding and the vehicle is used as security. YOU MUST pay the loan out. Its a banking requirement. In fact, the cheque from the insurance company will probably be made out to the bank and you.

[Boblobla]

Originally Posted by Sample00

if there is a loan outstanding and the vehicle is used as security. YOU MUST pay the loan out. Its a banking requirement. In fact, the cheque from the insurance company will probably be made out to the bank and you.

Okay, that is all I needed to hear. Thanks. CP > Google.

[4X4]

Originally Posted by Sample00

if there is a loan outstanding and the vehicle is used as security. YOU MUST pay the loan out. Its a banking requirement. In fact, the cheque from the insurance company will probably be made out to the bank and you.

Not necessarily. Bob, look at the original loan agreement. Is the actual vehicle listed on there as security?

I took out a loan to buy my old truck. My grandmother co-signed as my credit sucked at the time. The truck is not listed as security, but the loan is called an automobile loan.
I'm half assed trying to sell the old beast (I have issues letting things go), so I called the bank to find out the answer to your exact question. It turned out that paying out the loan right now in a lump sum would actually cost me $6 more than just paying it out in payments.

So if I do sell the truck, I wont pay out the loan since I wont save any money. And the bank doesn't care whether I still own the truck since they've got Grossi's* farm as collateral.

*Grossi is swiss for grandma

[Prototype]

If you secured the loan with the vehicle, you need to pay out the loan.

If you got an un-secured car loan, you can still make payments as before.

I guess same as what everyone else has stated... just coles notes version.

[Dion]

Is the fiancee okay Boblobla?

[Boblobla]

Originally Posted by Dion

Is the fiancee okay Boblobla?

Yeah, she had a sore neck for a few days but the insurance company said we should go to the Doctor and they said she was fine. The reason the car is a write off is the guy who hit her slamed on his brakes so he went under her car a ways and there was quite a bit of undercarriage damage.

She was just sad because it was her first car and women are overly emotional about that sort of nonsense.

That has turned to excitement now.

[MoneyGuy]

Originally Posted by czure32

....you mention possibly putting the funds into a high interest savings account and continuing making the regular payments, but that will only be beneficial if you earn more in interest than what the loan accumulates between payments

Maybe not even then. That interest is taxable at your marginal rate so if you get 3% interest, it's less than that after taxes.

[Sample00]

Originally Posted by Sample00

if there is a loan outstanding and the vehicle is used as security. YOU MUST pay the loan out. Its a banking requirement. In fact, the cheque from the insurance company will probably be made out to the bank and you.

Originally Posted by 4X4

Not necessarily. Bob, look at the original loan agreement. Is the actual vehicle listed on there as security?

I took out a loan to buy my old truck. My grandmother co-signed as my credit sucked at the time. The truck is not listed as security, but the loan is called an automobile loan.
I'm half assed trying to sell the old beast (I have issues letting things go), so I called the bank to find out the answer to your exact question. It turned out that paying out the loan right now in a lump sum would actually cost me $6 more than just paying it out in payments.

So if I do sell the truck, I wont pay out the loan since I wont save any money. And the bank doesn't care whether I still own the truck since they've got Grossi's* farm as collateral.

*Grossi is swiss for grandma

I believe I said..if the loan has the vehicle as security, it must be paid out. If it doesn't, then he doesn't need to.

[Sylvanfan]

Well don't settle the claim yet and say she's fine....My wife had a similar situation, seemed okay the first couple days and than it didn't feel so good. She still feels the effects of it today. I hope your fiancee isn't anything like what my wife is now....I wouldn't wish that on anyone, sucks to have someones life screwed up because some one who isn't very courteous runs a red light, or drives with undue care and attention causing an accident.

[4X4]

Originally Posted by Sample00

I believe I said..if the loan has the vehicle as security, it must be paid out. If it doesn't, then he doesn't need to.

Indeed. I must have read it too fast and misunderstood what you said.

[Deegee]

What kind of shady place has penalties for paying off term loans early?????

[Ice]

Won't the check from your insurance company be payable to the owners of the vehicle according to the title? Your insurance company would do this to ensure the loan is paid off with the proceeds. Perhaps there will be two checks cut, one for the payoff amount payable to your lender and the remaining balance to the private owner on title.

Years ago, I'd have to do an endorsement signature guarantee for a bank client on checks payable to the insurance company and my client. Then the insurance company would actually deposit the check and issue an insurance draft for the difference payable to the policy holder. I'm not sure that's required any longer.

[Temporary_User]

Originally Posted by 4X4

I'm half assed trying to sell the old beast (I have issues letting things go),

Originally Posted by Boblobla

She was just sad because it was her first car and women are overly emotional about that sort of nonsense.

[Titan]

Originally Posted by Temporary_User

Well done Temp. I always suspected 4x4 using a big truck to compensate.

j/k 4x4.