Post # 1
My husband has a remaining school loan of about $13,000. He works from home and barely uses his car. His car is fully paid off and worth just over his school loan amount (he could get about $15,000 on it) it is approaching 80k in mileage and has no issues.
My thought was to sell the car, to pay the school loan which has high interest…and then eventually get a new car with no interest (his last car has 0% interest) that is considerably less in payments per month than his school loan is.
This would save him approx $300.00-$400.00 a month. And at the rate he’s going now, the loan won’t be paid off for another 5 years.
Is this a no brainer? My husband was hestitant but kind of on board. It’s also something that hangs over our heads as we look into purchasing a home eventually. He keeps going back and forth with selling vs. “no it’s my baby” not selling. Well newsflash, we’re having a baby, so we could use the help.
He really loves his car, but the fact is he barely puts 20-40 miles a week on it and he can just drive me to work now that I work closer, or use my car when needed.
It’s not like he’d be without a car forever, he could purchase a new car if he wishes we just want to rid the school loan debt!
Post # 2
BellaDee: To me it seems like a no brainer. Sell the car, get rid of the debt.
Post # 3
Yep sounds like a no brainer to me…
If he’s still hesitant you suggest a new model that’s faster/more luxurious/bigger (or whatever he enjoys in a car) than his current car in the future to persuade him!
Post # 4
Keep in mind that 0% financing isn’t what is seems to be. They just factor in the cost of the interest/financing into the price of the car. So you’re paying it anyways.
Post # 5
- Wedding: A very pretty church.
Interest is where your money goes to die without buying you anything…if he can really get that much for it, it’s a no brainer.
Post # 6
Sell the car, he can get a used car for a few thousand and then work on it and make it his new pet.
Post # 7
0% interest is $16.67 per every $1000 financed. I consider that a steal of a deal. 0% financing on a $30k car would be $500. That same car with 3% interest would cost an extra $2343.67. Yikes!
With all that said, I would sell the car assuming that the interest on the school loan is more than $16.67 a month.
Post # 8
BellaDee: If i had that opportunity to be out of school debt I’d take it in a heartbeat. He could even use what’s left over as a downpayment on another car and have $200 car payment instead of a $400 loan payment if he’s worried about having a car.
Post # 9
I think that selling the car sounds like a smarter move right now. FI and I were a one-car household for a while and things worked out fine. We had to coordinate our trips and errands a little more, but it was really no big deal. It may also be worth researching the used car market for cars similar to his. Very often, the value of cars will drop off of a cliff once they hit 100k miles. Selling it before it hits that mark could give you a little more cash out of it than if you were to keep it and sell later.
Post # 10
BellaDee: Student debt is simply THE WORST kind of debt to be in. Even filing for bankruptcy will not exempt you from your student loans. If you have the chance to pay them off now, DO. My dad was so serious about me not having any student debt that he paid for college, and helped me pay off the $5,000 I owed on my first grad school experience (only a semester’s worth, even with a Pell Grant, can you believe it?).
Tell him that it’s only temporary, and if you’re willing to work together, you can make the one-car situation work well. I like the idea of him dropping you off at work.
You two must make these decisions together. You’re not doing yourselves any favors by getting further into debt even before a marriage. Starting with a clean financial slate will make a WORLD of difference, especially when/if you want to start a family.
Post # 11
Thanks everyone –
I guess I just feel like the bad guy for even making that an option. But his debt is my debt now, and it’s something we have to do. The one car situation can most definitely work, but so can him buying a cheaper car.
futuremrschristensen: Married, and baby due in September..so ya..I think he should get a move on! Logistically having one car scares me but I know it can be done for a bit if needed.
Post # 12
Why do you need to one car
Car value $15 k
Remainder $2k….in almost every state you can get a beater for around $4k….he could make that up in payments in less than 4 months.
Post # 13
Def. sell the car .. Plus no insurance payment too!
Post # 14
Interest is where your money goes to die without buying you anything
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Taiki: +1, love this explanation
Post # 15
futuremrschristensen: While I agree she should pay them off asap, student loans are definitely not the worst type of debt you could have. Generally they don’t reflect poorly upon your credit score, provided you make the payments on time.