Dilemma: Payoff car or student loan first?? Liability vs Full coverage??
 

So I have a 2014 fr-s with about 40k miles. 12k still financed at 2.7%.

Student loans are about 4% interest average. Owe about 22k..

Full coverage is about 140$/mo for me.

If I pay off the car and drop to liability it may save me more money than paying off half my student loan?

Is full coverage worth keeping?? considering I have a high deductible.. 1.5k I think

I'd keep the insurance. If you're still paying off student loans and they are for your education, you're prbably younger than some of us and may, I repeat MAY, have more of a tendency to get friskier than you should with the car. That said, conventional wisdom (and on this score I'm pretty conventional) is to pay off the highest cost debt first. Assuming you don't carry revolving credit card debt, I make the student loans a priority.

That's the same advice i give to sons #1, and #2.

I scraped this off the Interweb:

"To fulfill Alabama car insurance laws, you must have liability insurance to help pay for any damages or injuries you may cause to others in a car accident. Your liability coverage must include the following minimums: $25,000 for bodily injury or death per person."

I suggest you do some more homework .......;)


humfrz

hum, when he mentioned the highish deductible, I think he was referring to comprehensive. I know Ludwig has folks ready to pounce, I don't think this case warrants it. :cheers:

Yeah I have to keep liability but it's like 60$/mo vs 140$

12000 * .03 = 360/ yr in interest

Switching to liability saves me 960ish a yr

So 1200 ish a year I will save if I did that right.

The entire student loan 22000 * .04 = 880 a yr?

Deductible for comprehensive is 1.5k..

Switching to liability only "saves" you money if you don't consider risk. Drop collision, wreck your $15,000 car and it just cost you $15,000 in a few seconds.

I keep collision on all my vehicles (most of which were purchased for cash, and all of which are paid off) because I'd rather pay someone else to carry the risk.

The difference between a 3% and even a 10% loan isn't your problem, it's getting rid of the total debt. Pay off the lowest balance one first, then roll that payment into the other and pay it off early was well.

That's what I would tell my kids anyway.

There is a very good tool to answer such questions.
https://www.casio.com/resource/image...c-fx-991ex.png

Haha ikr. It's not that simple. Due to the insurance part of it.

Just looking for opinions.

Another factor is the car payment is higher than the student loans due to the term. Which would free up more cash?

Trying to to the smartest thing here.

I know, funny huh?:)

your lender is most likely going to require FULL coverage on your car... you would be foolish to drop full coverage anyway... can you afford to throw away 12k if something happens? I know hindsight is 20/20 but there is a reason a lot of people try to steer college students away from having a car payment.

Did not read full post.

Yes they require full coverage unless I pay it off.

I'm graduated and lucky to have a good job.

Yes I agree risk is a valid point/factor

No revolving debt whatsoever.

Do you have the ability to fix or replace your car on your own if an accident happens? Or what if someone steals it? Or what if a tree fell on it?

If you don't, keep full coverage for your primary vehicle.

Is student loan interest tax deductible? I can't remember. If so, I'd pay off the car.