vania-janet/multiturn-rag-retrieval-data huggingface dataset:
Pay off your car loan. Here is why: As you mentioned, the interest on your home mortgage is tax deductible. This may not completely offset the difference in interest between your two loans, but it makes them much closer.  Once your car debt is gone, you have eliminated a payment from your life. Now, here's the trick: take the money that you had been paying on your car debt, and set it aside for your next car. When the time comes to replace your car, you'll be able to pay cash for your car, which has several advantages.
As an FYI, working for a lending company, I can tell you many have a dollar amount limit that they'll just write off at the end of the month/quarter/etc just to get the loan off the books.  It's a little goofy, but I actually bothered to plan ahead and save $9.99 on my student loans since the lender would close out all accounts with a < $10 balance.
"Pay it off. If necessary, get a loan so you can pay it off; that's what refinancing is all about and your favorite bank or credit union would be happy to help you with this. If that isn't sufficient to make the car affordable you may need to sell it, take the loss, and learn from the experience. Sorry, but you made an agreement and it's up to you to find a way to meet your end of the bargain. (If you had decided you didn't like this loan within a few days of signing, you might have been able to back out under ""cooling off period"" laws. But those only allow a very limited time for reconsideration.)"
Also as mentioned, snowballing is aimed at small regular payments. You can do it with a lump sum, but honestly for a lump sum you can get better return taking it off the most expensive interest rate first (as the discipline issue doesn't apply). Another consideration is put it off the most renewable finance. Paying off your car... so your car's paid off. If you have an emergency, redrawing on that asset means a new loan. But if you put it off the house (conditional on interest rates not being to dissimilar) it means you can often redraw some or all of the money if you have an emergency. This can often be better than paying down the car, and then having to pay application fees to get a new unsecured loan. Many modern banks actually use ""mortgage offsetting"" which allows them to do this - you can keep your lump sum in a standard (or even fixed term) and the value of it is deducted ""as if"" you'd paid it off your mortgage. So you get the benefit without the commitment. The bank is contracted for the length of the mortgage to a third party financier, so they really don't want you to change your end of the arrangement. And there is the hope you might spend it to ;) giving them a few more dollars. But this can be very helpful arragement, especially if you're financing stuff, because it keeps the mortgage costs down, but makes you look liquid for your investment borrowing."
As the other answers indicate, if you look only at the clear mathematical formulas regarding your debts and their interest rates, then you'll see that it's better (less expensive) to pay off your student debt first.  However, you must also take into account the value of your car, as it is an asset. The older your car gets, the less it's worth. The more your car gets used and worn out, the less it's worth. Cars depreciate at about 15% per year on average. However, you're continuing to pay the same amount of money to keep a decreasingly valuable asset. Now, you also have to include the fact that you may be required to carry full-coverage car insurance, versus liability insurance. This can represent an increase in spending if you'd prefer to have liability only. With insurance in the picture, you should also be thinking about the possibility that something could happen to your vehicle that causes it to be worth less than you owe, or just worthless. If such an event happens, then you may have more difficulty acquiring a replacement vehicle. I, personally, don't find the increase in total interest paid on student loans to offset the other consideration regarding the value of a car. I'm in a similar situation as you (except your values are all about double what mine are). The peace of mind I gain from being able to pay off the car more quickly, and use that money towards loans or whatever I want, is worth the interest I'll earn by not putting that money into the student loans instead. I also prefer the idea of being able to more easily use my vehicle as a trade in, in case I need to get a different vehicle to better suit my family size.
"It all depends on your loan contract, and the way most are written, the 10 day thing will not help.  However, assuming that the contract is written in such a way to allow this, the difference will be negligible. By ""saving money"" I assume you mean the amount of interest paid.   There is really two ways of doing this.  If you carry the loan to term paying the indicated amount on the due date you will pay $6,140 in interest.  An increase of over 33% to the cost of the car.  Yikes, that is a lot of money.   You should seek to minimize your interest expense.   One way to do this is to reduce your rate.  Applying for a new loan that is at a more reasonable 6% and continuing to pay the ~285 per month will reduce the term to 59 months and only cost you $2,245 in interest.  A large savings.   Even better is to work a second job and earn an extra 1,000 per month.  Then bundle it with your 285 payment and shoot that at the loan.  This way you will only pay $965 in interest, and have it paid off in a year.  Once you do that, you can stick $300/month or so in a savings account or other investment and pay for every other car in cash.  Making choices like these leads to building wealth.  So the question becomes do you want to spend the rest of your life on the hamster wheel of car payments, or do you want to spend one year in pain so you make smart choices in the future?  The choice is yours."
Two principles in comparing different scenarios:  1) keep the two scenarios as equal as possible in amount and timing of payments;  and 2) find the financial comparison at one particular point. So, your car loan, $10,000 for 35 months at 8% compounded monthly means you're paying $321.29 Suppose you make the switch and keep on paying the same, mortgage and $321.29 for the 35 months (see 1, above) Those extra payments, continued for 35 months at your mortgage rate of 5.59%, will pay off a mortgage of $10,354.10, which will more than pay off the $10,000 you added to the mortgage  In other words, making the switch will benefit you to the tune of 354.10 as of the day of the switch.  You could ask the mortgage company to give you the $10,000 and the $354.10, and all your payments and amortization would stay the same... (see 2 above) Of course, this is pretty much what Joe Taxpayer said...
what you aim to do is a great idea and it will work in your favor for a number of reasons. First, paying down your loan early will save you lots in interest, no brainer. Second, keeping the account open will improve your credit score by 1) increases the number of installment trade lines you have open, 2)adds to your positive payment history and 3) varies your credit mix. If your paid your car off you will see a DROP in your credit score because now you have one less trade line. To address other issues as far as credit scoring, it does not matter(much) for your score if you have a $1000 car loan or a $100,000 car loan. what matters is whether or not you pay on time, and what your balance is compared to the original loan amount. So the quicker you pay DOWN the loans or mortgages the better. Pay them down, not off! As far how the extra payments will report, one of two things will happen. Either they will report every month paid as agreed (most likely), or they wont report anything for a few years until your next payment is due(unlikely, this wont hurt you but wont help you either). Someone posted they would lower the amount you paid every month on your report and thus lower your score. This is not true. even if they reported you paid $1/ month the scoring calculations do not care. All they care is whether or not you're on time, and in your case you would be months AHEAD of time(even though your report cant reflect this fact either) HOWEVER, if you are applying for a mortgage the lower monthly payment WOULD affect you in the sense that now you qualify for a BIGGER loan because now your debt to income ratio has improved. People will argue to just pay it off and be debt free, however being debt free does NOT help your credit. And being that you own a home and a car you see the benefits of good credit. You can have a million dollars in the bank but you will be denied a loan if you have NO or bad credit. Nothing wrong with living on cash, I've done it for years, but good luck trying to rent a car, or getting the best insurance rates, and ANYTHING in life with poor credit.
pay off one of the cards completely. there are several reasons why:
First of all any loan will have the last payment be slightly different than the rest. Even if the interest rate is zero it is hard to have a perfect monthly payment amount. By perfect I mean the amount of the loan divided by the number of months would be $ddd.cc0000...  When looking at the amortization table the last payment will either be slightly higher or lower to adjust for the rounding that was done. My suspicion is that the rounding would have resulted in a left over 12 cents. It is also possible that you are paying it off slightly early and the computer is simply taking the leftover amount an spreading it over the remaining period of the loan. You could be paying it early because for the main part of the loan was paid to a company that rounds all payments to the higher dollar, or has a minimum monthly payment amount. I looked at the company you mentioned in the question, and searched the site for an amortization tool. I found it, and used the pre-filled in example. https://www.edfinancial.com/amortizationschedule?pmts=120&intr=6.8&prin=25000 If that last payment is not adjusted the borrower will still owe $0.12. The fact it equals your situation is a coincidence. But is does show what can happen.
Cash price is $22,500. Financed, it's the same thing (0% interest) but you pay a $1500 fee. 1500/22500 = 6.6%. Basically the APR for your loan is 1.1% per year but you are paying it all upfront. Opportunity cost: If you take the $22,500 you plan to pay for the car and invested it, could you earn more than the $1500 interest on the car loan? According to google, as of today you can get 1 year CD @ 1.25% so yes. It's likely that interest rates will be going up in medium term so you can potentially earn even more.  Insurance cost: If you finance you'll have to get comprehensive insurance which could be costly. However, if you are planning to get it anyway (it's a brand new car after all), that's a wash. Which brings me to my main point: Why do you have $90k in a savings account? Even if you are planning to buy a house you should have that money invested in liquid assets earning you interest.  Conclusion: Take the cheap money while it's available. You never know when interest rates will go up again.
"Just to argue the other side, 1.49% is pretty low for a loan. Let's say you have the $15k cash but decide to get the car loan at 1.49%. Then you take the rest of the money and invest it in something that pays a ~4% dividend (a utility stock, etc.). You're making money on the difference. Of course, there's no guarantee that the underlying stock won't drop in value, but it might go up, too. And you'll likely pay income tax on the dividends. Still, you have a good chance of making money by taking the loan. So I will argue that there are scenarios where taking advantage of a low interest rate loan can be ""good"" as an investment opportunity when the risk/reward is acceptable. Be careful, though. There's nothing wrong with paying cash for a car!"
Which way would save the most money? Paying of the car today would save the most money.  Would you borrow money at 20% to put it in a savings account?  That's effectively what she is doing by not paying off the car. If it were me, I would pay off the car today, and add the car payment to my savings account each month.  If the car payment is $400, that's $1,500 a month that can be saved, and the $12k will be back in 8 months. That said - remember that this is your GIRLFRIEND, not a spouse.  You are not in control (or responsible for) her finances. I would not tell her that she SHOULD do this - only explain it to her in different ways, and offer advice as to what YOU would do.  Look together at how much has been paid in principal and interest so far, how much she's paying in interest each month now, and how much she'll pay for the car over the life of the loan.  (I would also encourage her not to buy cars with a 72-month loan, which I'm guessing is how she got here). In the end, though, it's her decision.
"Numbers: Estimate you still owe around 37000 (48500 - 4750, 5% interest, 618 per month payment). Initial price, down payment, payments made - none of these mean anything.  Ask your lender, ""What is the payoff of the current loan?"" Next, sell or trade the current vehicle. Compare to the amount owed. Any shortfall has to be repaid, out of pocket, or in some cases added to the price of the new car and included in the principal of the new loan.  You cannot calculate how much you still owe the way you have, because it totally ignores interest. Advice on practicality:  Don't do this.  You will be upside down even worse on the new car from the instant you drive off the lot.  Sell the current vehicle, find a way to pay the difference - one that doesn't involve financing. Cut your losses on the upside down vehicle. Then purchase a new vehicle. I'm in the ""Pay cash for gently used"" school, YMMV. Another option is to go to your bank.  Refinance your car now to get a lower interest rate.  Pay as much of the principal as you can.  Keep that car until it is paid off.  Then you will not be upside down. If you're asking how to use the estimator on the webpage.  Put the payoff in the downpayment as a negative and the trade in value in the trade in spot.  Expect the payment to go up significantly.   Another opinion that might be practical advice.  Nothing we say here will convince your financially responsible spouse that this is a good idea."
Without knowing the terms of the company leased car, it's hard to know if that would be preferable to purchasing a car yourself. So I'll concentrate on the two purchase options - getting a loan or paying in full from savings. If the goal is simply to minimize the amount paid for this car, then paying the full cost up-front is best, because it avoids the financing and interest charges associated with a loan. However, the money you would pay for this car would come out of somewhere (your savings). If your savings were in an investment earning a risk-adjusted return rate of, say, 5% APY and the loan cost 1% APY, you'd have more money in the long run by keeping as much money in your savings as possible, and paying the loan as slowly as possible, because the return rate on your savings is higher. Those numbers are theoretical, of course. You have to make a decision based on your expectation of the performance of your investments, and on the cost of the loan. But depending on your risk tolerance and the loan terms available to you, a loan may well make sense. This is especially true when loans costs are subsidized by manufacturers, who often offer favorable financing on new cars to drive demand. But even bank loans on cars can be pretty inexpensive because the car is a form of collateral with predictable future value. And finally, you should consider tax treatment -- not usually a consideration in purchases of cars by consumers in the US, but can vary due to business use and certainly may be different in India. See also: How smart is it to really be 100% debt free?
Note that you still have a hundred dollar bill in your pocket that you've saved for five years, but now that money can buy less product. For example, if you say that $100 buys 50 gallons of gasoline ($2/gallon) in 2010, you will only be able to afford 46.5 gallons with that same bill in 2015 ($2.15/gallon). As you can see, the 7% inflation caused a 7% increase in gasoline prices. In other words, if the value of the car remained the same, its actual price would go up, because the value stayed the same. However, it's more likely that the car's value will decrease significantly in those five years (perhaps as much as 50% or more in some cases), but its price would be higher than it would have been without inflation. If the car's value had dropped 50% (so $50 in original year prices), then it would have a higher price (50 value * 1.07 currency ratio = $53.50). Note that even though its value has decreased by half, its price has not decreased by 50%, because it was hoisted up by inflation. For your final question, the purpose of a loan is so that the loaner will make a profit from the transaction. Consider your prior example where there was 7% inflation over five years. That means that a loan for $100 in 2010 would only be worth $93 in 2015. Interest is how loans combat this loss of value (as well as to earn some profit), so if the loaner expects 7% inflation over five years, they'll charge some higher interest (say 8-10%, or even more), so that when you pay them back on time, they'll come out ahead, or they might use more advanced schemes, like adjustable rates, etc. So, interest rates will naturally be lower when forecasted inflation is lower, and higher when forecasted inflation is higher. The best time to get a loan is when interest rates are low-- if you get locked into a high interest loan and inflation stalls, they will make more money off of you (because the currency has more value), while if inflation skyrockets, your loan will be worth less to loaner.
If suddenly I come into a large sum of money and decide I want to pay off the mortgage in the 16th year, but the bank has already received all the interest computed for 30 years, shouldn't the bank recompute the interest for 16 years and then recalculate what's actually owed in effect on a 16 year loan not a 30 year loan? It is my understanding that the bank doesn't do this. What they do is just tell you the balance owed under the 30 year agreement and that's your payoff amount. Your last sentence is correct. The payoff amount is simply the principal outstanding plus any interest from (p*I)/12 that you owe. In your example of trying to payoff the rest of your 30 year loan in year 16, you will owe around 68% of your original loan amount. That seems unfair. Shouldn't the loan be recalculated as a 16 year loan, which it actually has become? In fact, you do have the equivalent of a 15 year loan (30-15=15) at about 68% of your initial loan amount. If you refinanced, that's exactly what you would see. In other words, for a 30y loan at 5% for $10,000, you have monthly payments of $53.68, which is exactly the same as a 15y loan at 5% for $6,788.39 (your principal outstanding after 15 years of payments), which would also have monthly payments of $53.68. A few years ago I had a 5 year car loan. I wanted to prepay it after 2 years and I asked this question to the lender. I expected a reduction in the interest attached to the car loan since it didn't go the full 5 years. They basically told me I was crazy and the balance owed was the full amount of the 5 year car loan. I didn't prepay it because of this. That is the wrong reason for not prepaying. I suspect you have misunderstood the terms of the loan - look at the Variable Monthly Payments section above for a discussion. The best thing to do with all loans is to read the terms carefully and do the calculations yourself in a spreadsheet.
"I'm going to give a simpler answer than some of the others, although somewhat more limited: the complicated loan parameters you describe benefit the lender. I'll focus on this part of your question: You should be able to pay back whenever; what's the point of an arbitrary timeline? Here ""you"" refers to the borrower. Sure, yes, it would be great for the borrower to be able to do whatever they want whenever they want, increasing or decreasing the loan balance by paying or not paying arbitrary amounts at their whim. But it doesn't benefit the lender to let the borrower do this. Adding various kinds of restrictions and extra conditions to the loan reduces the lender's uncertainty about when they'll be receiving money, and also gives them a greater range of legal recourse to get it sooner (since they can pursue the borrower right away if they violate any of the conditions, rather than having the wait until they die without having paid their debt). Then you say: And if you want, you can set a legal deadline. But the mere deadline in the contract doesn't affect how much interest is paid—the interest is only affected by how much money is borrowed and how long has passed. I think in many cases that is in fact how it works, or at least it is more how it works than you seem to think. For instance, you can take out a 30-year loan but pay it off in less than 30 years, and the amount you pay will be less if you pay it off sooner. However, in some cases the lender will charge you a penalty for doing so. The reason is the same as above: if you pay off the loan sooner, you are paying less interest, which is worse for the lender. Again, it would be nice for the borrower if they could just pay it off sooner with no penalty, but the lender has no reason to let them do so. I think there are in fact other explanations for these more complicated loan terms that do benefit the borrower. For instance, an amortization schedule with clearly defined monthly payments and proportions going to interest and principal also reduces the borrower's uncertainty, and makes them less likely to do risky things like skip lots of payments intending to make it up later.
"Paying off a loan early isn't a bad thing.  Having a credit card for 6 months and then closing it is probably unneeded; pay it off and then keep it as an emergency card.   The key is debt:available credit ratio.  Look at this article for example which explains the different elements; the only one you're affecting here is the second, your debt load.  If you're not planning on asking for another loan in the next six months, none of this really matters - assuming you are paying it off for sure, in six months, your debt will be gone and your credit score recovered from any hit it takes (and if you get a $1500 credit card and only put $300 on it, it might actually improve your credit). But having an open $1500 credit card with a 0 balance will probably improve your credit rating, unless you have a really high amount of available credit.  It will improve your debt/credit ratio (ie, total $ you owe divided by total $ you could put on your CCs/revolving credit). This is all aside from the ""is it a good idea to borrow money for a 3 month vacation before starting working"", which the answer is ""Well, not exactly"".  That's not from a credit perspective, just from a living within your means perspective.  If you have a firm job that will easily pay off the vacation, it's probably not a bad thing, but definitely a certain number of people will take this and end up in 'spending bad habits' that last their life.  Be aware of that, and if you're just loaning yourself money from the future, make sure you understand the terms of that loan... and are certain you can pay it off."