Need some advice..

[holtk5]

i have my car loan (still got $9500 to pay) at 8.5%. Its fixed so i can only make the minimum payments each month. This is really annoying me as i want to make extra repayments to bring the loan down. My partner and i will be getting our first home loan after xmas too, is there a way i can incorporate this debt into our loan or is it better to keep it the way it is? I am thinking of finding a loan that i can make extra repayments on, even if the interest rate is higher. Any advice
Thankyou!
Kate

 

[GoAnna!]

Hi kate

Would I be correct in assuming that you have no crdeit card debt? If this car loan is your only debt then its no big deal in the scheme of things?

How much do you have to pay per month? When will it be paid out at the current rate? What would the penalty payment be if you refinanced the loan?

I suspect that it would not make much financial sense at this stage to pay it off any quicker and assuming that you have no other debts I think saving as much as you can between now and Christmas would be the bets plan.

Given you will need access to your savings at Christmas I would think that parking your money in the best savings account or term deposit would be the way to go.

If you are concerned that the car loan may make it difficult to obtain your house loan get that checked out with a broker now to put your mind at ease.

 

[holtk5]

Hi kate

Would I be correct in assuming that you have no crdeit card debt? If this car loan is your only debt then its no big deal in the scheme of things?

How much do you have to pay per month? When will it be paid out at the current rate? What would the penalty payment be if you refinanced the loan?

I suspect that it would not make much financial sense at this stage to pay it off any quicker and assuming that you have no other debts I think saving as much as you can between now and Christmas would be the bets plan.

Given you will need access to your savings at Christmas I would think that parking your money in the best savings account or term deposit would be the way to go.
If you are concerned that the car loan may make it difficult to obtain your house loan get that checked out with a broker now to put your mind at ease.

Hi GoAnna,
Yes at the moment this is the only debt i have. I pay $280 per month, over 5 yrs (beginning Jan 06), so im guessing paid out by Jan 2011. Im not sure of the penalty if i refinanced. I was told when i bought the car (by the 'finance' manager) at the car dealer that 'yes' i was able to make extra repayments, but i soon realised that was not the case!
Im confident that the car loan wont be a problem when we apply for our home loan, i'd just like to pay it off quicker than the $280 per month!

 

[TheCamel]

hi Kate,

I guess you have spoken to the financer about the loan, and they told you that they wouldn't accept extra payments as it's fixed ?

i only ask because I had (have) a fixed rate 8.5% loan with westpac for a similar figure over 5 years.. and i just pay whatever i feel like, provided im making minimum payments..

ask them about payout figures, and establish if you can refinance it, by getting a loan with a new lender to pay out that loan. (maybe at the priceo f a slightly higher interest rate..)

 

[Simon]

Make the minimum repayments and save a deposit for your home. The higher the deposit the less fees you will pay.

After you are in your home then switch your attention to the car loan. If they wont allow you extra repayments then save in your offset account until you have enough to pay it out completely.

Sounds like you were stitched up into a product by the car dealer. Next time seek out a personal loan.

Avoid consolidating this loan into your mortgage - imagine what that car will end up costing if you pay it out over 30 years

Have a read of this fine post

 

[Simon]

I was told when i bought the car (by the 'finance' manager) at the car dealer that 'yes' i was able to make extra repayments, but i soon realised that was not the case!QUOTE]

If this is an issue for you then contact the Banking and Financial Services Ombudsman

 

[holtk5]

hi Kate,

I guess you have spoken to the financer about the loan, and they told you that they wouldn't accept extra payments as it's fixed ?

i only ask because I had (have) a fixed rate 8.5% loan with westpac for a similar figure over 5 years.. and i just pay whatever i feel like, provided im making minimum payments..

ask them about payout figures, and establish if you can refinance it, by getting a loan with a new lender to pay out that loan. (maybe at the priceo f a slightly higher interest rate..)

yeah i have. I can make extra repayments but it goes into a credit holding account, its maximum being $500.

 

[holtk5]

Make the minimum repayments and save a deposit for your home. The higher the deposit the less fees you will pay.

After you are in your home then switch your attention to the car loan. If they wont allow you extra repayments then save in your offset account until you have enough to pay it out completely.

Sounds like you were stitched up into a product by the car dealer. Next time seek out a personal loan.

Avoid consolidating this loan into your mortgage - imagine what that car will end up costing if you pay it out over 30 years

Have a read of this fine post

Thanks for the advice Simon. I was annoyed when i found out that i couldnt make extra repayments. I'd orginally had another bank in mind that allowed extra payments but at a higher interest rate. The guy got me at 'but the interest rate with us is only 8%', in HINDSIGHT i shouldnt have been talked into it. Anyhow you live and learn

Will concentrate on the deposit!

 

[ggumpshots]

Thanks for the advice Simon. I was annoyed when i found out that i couldnt make extra repayments. I'd orginally had another bank in mind that allowed extra payments but at a higher interest rate. The guy got me at 'but the interest rate with us is only 8%', in HINDSIGHT i shouldnt have been talked into it. Anyhow you live and learn

Will concentrate on the deposit!

Which bank?
You seem to have a really bad loan.
Also what's your car going to be worth on the second hand market in 2011?

I would get out of that loan asap. don't be intimidated by a contract. Approach the bank Manager and find out what he requires to finish the contract early. Mention you want to buy a house , that may be a leverage point.
Please read the fine print !

 

[kingchevy]

look don't worry about the loan you already have to late you have the car and signed the contract to repay it now just make minimum repayments and concentrate on what is important ie buying a house if later on you can afford to repay the loan total amount of the loan then do so. anyway that is what I would do/have done.