Loans — which to pay off?
Hi Terry, I have a mortgage at 4.5% . I pay $560 per month and my mortgage will be paid off in Nov 2024. I bought a new car (got hookwinked, but that’s for another day)I pay $460 per month at 4.1% for 72 months…with a payoff date in Sep 2025. My question is, if I have any extra money during the month should I put it towards my mortgage or my car payment? Should I try and re-finance my house and absorb the car payment into the mortgage? I only have 1 credit card and generally the balance is under $100, and my only other monthly expenses are my utility bills. Thank you in advance for your help.
Terry Says
This is kind of a wash. But your mortgage interest is tax deductible, while the interest on your car loan is not! I hate car loans! You’re driving something that is worth LESS every day — and you’re paying more every day because of the interest. (To me, the only thing worse is charging a restaurantemeal and paying the minimum each month and accruing interest for something that is already down the drain — literally!) Accumulate as much money as you can and they pay off the loan, or pay it down and refinance it. Car dealers are offering 9% loans on cars (made up in the purchase price) these days. So if you have good credit get out of that loan asap. Check with your bank or credit union for a better deal — which they will likely offer if you can pay down a big hunk of the balance.
