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

[mrg666]

Originally Posted by mav1178

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.

How about a meteor strike

[max20s14]

Originally Posted by Spuds

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

It is but it's only a% I think. I don't think it saved me much last year filing.

Edit: it subtracts the interest from your taxable income.

So it would mabe save 200$ in taxes

[max20s14]

Originally Posted by mrg666

How about a meteor strike

That would be unfortunate but probably worth the 15k for the story. If comprehensive even covers that lmao.

One option is keeping full coverage and just paying off the car.

[mrg666]

Originally Posted by max20s14

That would be unfortunate but probably worth the 15k for the story. If comprehensive even covers that lmao.

One option is keeping full coverage and just paying off the car.

Yeah, I would only regret not playing the Powerball if a meteor strikes my car

[mav1178]

At some point in your life, probably past 25 or 30, you will realize that saving money by going to liability-only on your coverage only works if the car in question is a secondary or weekend car. Otherwise, driving a liability-only car is just asking for your out of pocket expenses to skyrocket when an accident or theft does happen.

Liability only policies work when you have some type of backup plan or cash saved up to replace/repair the car.

[Spuds]

Originally Posted by max20s14

It is but it's only a% I think. I don't think it saved me much last year filing.

Edit: it subtracts the interest from your taxable income.

So it would mabe save 200$ in taxes

I'm far too lazy to do the math nowadays, so I'll defer to yours.. Maybe I should have said that the tax deduction COULD work out in OPs favor.

But that's 200 plus what OP won't be paying a year for the auto loan, vs just the student loan. Depending on the monthly payment (which in turn depends on a lot of things) it might be better financially for the OP. Obviously OP would have to do the math with actual numbers to find out.

[max20s14]

Originally Posted by Spuds

I'm far too lazy to do the math nowadays, so I'll defer to yours.. Maybe I should have said that the tax deduction COULD work out in OPs favor.

But that's 200 plus what OP won't be paying a year for the auto loan, vs just the student loan. Depending on the monthly payment (which in turn depends on a lot of things) it might be better financially for the OP. Obviously OP would have to do the math with actual numbers to find out.

Assuming I make no payments. The auto loan interest cost 360 a year.

The TOTAL student loan cost 880/yr - 200 in tax deduction. So 680.

If I played off my car saves 360 this year.

If I pay off 12k of the 22k in student debt saves about the same I think???

[Tcoat]

Originally Posted by mrg666

Yeah, I would only regret not playing the Powerball if a meteor strikes my car

If a meteor strikes your car will be the least of your worries (or I suppose you will have no worries at all)

Unless it is one of these:

Originally Posted by mav1178

At some point in your life, probably past 25 or 30, you will realize that saving money by going to liability-only on your coverage only works if the car in question is a secondary or weekend car. Otherwise, driving a liability-only car is just asking for your out of pocket expenses to skyrocket when an accident or theft does happen.

Liability only policies work when you have some type of backup plan or cash saved up to replace/repair the car.

There are at least 6 tales of woe where somebody cancelled their collision and then got hit on this forum alone. It is a false savings to not have it.

[Dadhawk]

Originally Posted by max20s14

It is but it's only a% I think. I don't think it saved me much last year filing. Edit: it subtracts the interest from your taxable income. So it would mabe save 200$ in taxes

I wouldn't let a tax deduction figure too heavily into the decision. Basically the way a tax deduction work is you get $xxx to a bank so that the government will give some small percentage of that money back.

For example, if you are in a 25% tax bracket (to make the math easy) and you pay $100 of interest towards your tax deductible student loan, you will owe the govt $25 less in taxes for the year.

Conversely, if you don't have loan, you'll pay $25 additional in taxes, but you get to keep $75.

I know which one I prefer.

[why?]

Originally Posted by max20s14

Assuming I make no payments. The auto loan interest cost 360 a year.

The TOTAL student loan cost 880/yr - 200 in tax deduction. So 680.

If I played off my car saves 360 this year.

If I pay off 12k of the 22k in student debt saves about the same I think???

Do you have the cash on hand to pay off the car? The way to pay off debt is to look at the total amount you owe, and like Dadhawk said pay off the lowest amount first. Having one loan is better than having two.

And keep full coverage on your car. It just takes one unlicensed uninsured driver wrecking your car and you lose it all if you don't have full coverage.

[VoltsFRS2013]

Most car dealers wont even let you take a car from their lot without full coverage insurance. I'm only 18 and that was a huuuge factor in getting my car when i was in the market for it.

[Th3rdSun]

Originally Posted by VoltsFRS2013

Most car dealers wont even let you take a car from their lot without full coverage insurance. I'm only 18 and that was a huuuge factor in getting my car when i was in the market for it.

I don't think there's any reputable dealerships that will finance you a car without full coverage.

also,OP,don't for get that the older you get,the cheaper your insurance will be. Assuming that you don't make any significant claims.IIRC,here in Illinois,after age 23~24,you would see a noticeable decrease,then decreases after every three years or so until you are about mid 30's,or something like that.

[why?]

Originally Posted by Th3rdSun

I don't think there's any reputable dealerships that will finance you a car without full coverage.

also,OP,don't for get that the older you get,the cheaper your insurance will be. Assuming that you don't make any significant claims.IIRC,here in Illinois,after age 23~24,you would see a noticeable decrease,then decreases after every three years or so until you are about mid 30's,or something like that.

Yea but be honest, insurance for this car is insanely high.

[Tcoat]

Originally Posted by why?

Yea but be honest, insurance for this car is insanely high.

Depends on who and where you are. I pay less for this than I did my Lancers. The wife's new Impreza cost more. I doubt that it is much ore that slightly above average for most people. It is individuals that cost more for insurance not the car.