A few years ago, after realizing that my commute route to the job of my dreams is taking me more than three hours a day by public transportation, and that I could basically cut that time in half if I could travel by car, I’ve finally decided to get a Honda civic. I’ve always wanted this car because my father used to have an older model, plus it is a great car for new drivers, so naturally I had to get a loan. Leasing didn’t look like a good option to me, although there are certain advantages, it gave me the impression of a car rental service, and the part with the limited miles that I can drive didn’t make sense to me. As someone who never had a loan before, plus my parents always made sure to pay their debts on time and they didn’t bother me with details, I was kind of scared at the first moment. Initially, my guts were telling me that I should check every detail of my loan agreement before the purchase, but the moment I saw the car of my dreams I just had to have it. I bought the car and I was happy, and the bank was happy, the salesman was happy as well. At that time I was a little younger, one might say naive, and I didn’t have a wife back then that now literally hates my Honda. So now I’m stuck with new loans, bills are piling up, and I have to get on top of my car loan payments as soon as possible because the Mrs. wants a new Toyota.
With my interest rate now on 5.2%, and 5 short years turning into a long 28 months and counting, I have to say that the amount of money that I will literally lose is really depressing for me. That could be a great down payment for a new purchase, and with my car dropping its value with every new mile that I cross the whole “I’m getting a car that is so exciting” feels kind of stupid now. As I found out, there are a few ways to lose less money, or pay my loan sooner.
This could help only if my payments were not so much larger, but arranged in a shorter period of time. Of course, refinancing rarely works that way, only offer that I got was to expend my loan for a few years more, and when you add up the interest that I would end up paying with that system it simply made no sense.
The Trouble of Skip-a-month
I went on a holiday tempted by the offer to skip a payment, and then I’ve skipped another month just because I got used to it. Those few payments that I’ve skipped would actually help me now when I’m counting every day, let alone a whole two months. Of course, the interest rate just piled up on me and now I’m losing more money and more time. I didn’t even enjoy Hawaii that much.
One Large One
One large payment could actually help me, and it can be done per year or over the term of the loan. That could help me save some time and money on interest, sounds great doesn’t it? Only problem is I cannot afford it, and borrowing is not an option, that’s just a whole new world of troubles.
The first thing I asked myself was why should I pay 26 payments per year instead of 24? But when I did the math with a bi weekly auto loan calculator I realized that I’ve found a perfect solution for my problem! Even the convenience of moving the money around works out great for me, and not only that I will save time with this method, I will save some money on interest as well! Why didn’t I find this out sooner?
The fact that I’m getting reminded every two weeks that my loan is getting paid sooner really lifts up my spirit on those days. Not so sure about the Toyota tough, especially after seeing that new Honda.