Your Questions About Save Loan Interest

James asks…

interest rate on car loan with no credit?

I’m in college and want to buy my first car. I plan on saving my money and buying a cheap car in the summer. I think by then I can save around $1200-$1500 as a down payment. I don’t want to spend more than $4500 for a car.
What is the usual/average interest rate for a car for someone with no credit. I want to know so I can plan to either save more or adjust my expectations.
I do have a job… I don’t make much, but I get around 11,000 a year and I have little/no expenses.

John answers:

Keep saving as loans for that size used
cars are Expensive IF u can get one.
Figure 15-25%

Mandy asks…

Annual Interest question?

Having a hard time understanding a calculus problem. I am suppose to use questions such as amortization and present value when needed. Just need help. Here it is:
You take out a loan for $70,000 at an annual interest rate of 9.5% for 20 years. After 72 months, you decide to refinance the loan at a rate of 8.5% for the remaining length of the loan.
What are the new monthly payments? How much do you save in interest?

John answers:

Here is an easy to use online amortization table calculator that shows that a $70,000 loan at 9.5% for 20 years has a monthly payment of $652.49 and at the end of 6 years (or 72 payments) has a balance of $60,507.34.

If you refinance that $60,507.34 for 14 years at 8.5%, your monthly payment drops to $617.13. Therefore, you save $35.36 for 168 months and your total interest savings is $5,940.48.


William asks…

$10,000 student loan with a 10% interest rate and would like to start saving for a home…?

I have $10,000 in a savings account with a 3% interest rate now. I want to know if it’s better to pay off the loan in full now and then continue saving or just keep making payments as well as saving.

Note: The minimum payment on the loan is less than $200/monthly, but I have been making $1,000 payments to try to pay this off more quickly since it has a high interest rate.

John answers:

I say continue doing what you’re doing! Pay off $1000 a month, to pay it down, and save what you can towards your house!

Also, look to see if you can negotiate a cheaper interest rate!

However, if you aren’t really saving any extra by paying the $1,000 a month, and the $1,000 is coming from your savings anyway, it really might be worth it to wipe out your savings. I would look at how fast it will take you to accumulate more savings! You don’t want to put yourself in a pickle where you have no savings in case something happens, however, if you are able to save a couple thousand a month, it would be worth it to pay it off in full now.

Good luck!!

Sandy asks…

should I pay off car loan?

Have a 60 month 1.9% car loan. Owe about $20,000 on it and 56 months remaining. Thinking of paying it off. Is that the right move? Or should I just invest the $20000, A safe money market fund is paying 1.1% right now and I figure I will actually come out a couple hundred dollars ahead of what I have to pay in interest on the car, even more if saving interest rates increase. Paying off will not hurt me financially but I don’t know if that is the right move. I owe nothing else. Thanks for your help

John answers:

Paying 1.9% interest on loan and Savings making 1.1% interest and your going to make more money on interest on savings? Must be better at math than me…………………….$$$

Nancy asks…

School loan interest rates?

Why can I get an interest rate on a car loan that is so much less than my student loans? School loans go toward college allowing for a better paying job to pay more in taxes, and along with a high interest rate of 6 – 6.8%, pay more on the money I borrowed. And every year tuition increases furthering this dependency. College is an investment not only for me, but for the nation itself. It’s going to hit a point where going to college isn’t a financially wise decision.

John answers:

I got 0% interest loans, but i didn’t need to take a whole lot out. The rates would need to get pretty high for it to not be financially wise and even if it did people would save the money first and then go to college to avoid the loans.

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