1. Achieve cost avoidance, that is by settling the loan early, the settlement amount is smaller than the total balance loan to be paid.
2. Reduce my cost for insuring the car, ie I can dictate the insured amount for the car. The lower the insured amount, the lower will be my premium.
I called up the bank and inquired about my settlement cost. Likewise, I checked also my capability to pay the settlement amount either thru loan from family member or from another credit facility. My credit company was offering a low monthly interest. I evaluated the situation and I made a graph to simplify my analysis.
From the graph above, I can say,
1. I can avoid cost of 11k if I settle my auto loan by this month. That's about 10% cost saved. Now the only thing to do is here is to look for the money to settle it.
2. My credit card offered me a low interest per month. This facility will give at least few months to look for the money to pay the loan aside from the fact that I can still achieve cost avoidance. This cost saved will get smaller as the payment duration is increased. Another advantage of this option is I can earn reward points which I can use to pay my annual credit card free.
3. Let's say you have the settlement money of 104k. What if we just invest it and continue to pay the monthly amortization. At the interest rates banks are offering, 104k will not yield 11k in two years time.
The bottom line here is that settling this auto loan will let me avoid cost. I can be able to reduce also my insurance premiums and that's another cost avoidance. So what's the next thing to do? Find a family member whom I can borrow money with little or no interest, and/or check my credit card facility for good low interest offers? What do you think, should I continue paying my dues or settle it if I can get the money?
One can settle his auto loan before tenure period also by paying loan amount in one go but only after sometime which depends on bank terms. For more information on auto loan checkhttp://www.dialabank.com/article.cfm/articleid/5804/
ReplyDeletea lot of factors go into decisions like this, its best to cover all of your options. Much like when I needed to use a http://lifesthreads-jrn.blogspot.com/2013/02/auto-loan-to-settle-or-not-to-settle.html to cover finances when I couldn't wait. You gotta do what is best for your situation
ReplyDeleteA big thank to you for sharing this kind of information with us regarding Auto loan. This information proves to be an effective for us. But here, is my suggestion to all people ,whenever you want to apply for any loan, always ask from many firms available near you and compare the best option then apply for auto loan.
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