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Scion FR-S / Toyota 86 GT86 General Forum The place to start for the Scion FR-S / Toyota 86 | GT86 |
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09-13-2017, 12:50 PM | #43 | ||||||
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If someone was diligent, they could put the savings they make from having full coverage insurance into an easily accessible, high interest savings account. If you do this right, you're putting away only the money you would spend on insurance (maybe a bit more), separate from any savings you would put away otherwise. you could probably just buy a new car in cash every 10-15 years. Quote:
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If you do decide to want to go liability only, then even though the car has lower interest, it may save you more money if the amount you'll save on the insurance is significant enough. Personally, I don't believe in being overly insured (burdened). Not just talking about car insurance but in addition to all other insurances. We can talk about all sorts of anecdotes, someone getting sick, tree falling on house, getting hit at an intersection----but insurance companies exist purely because whatever they're insuring doesn't happen very often. If it did, they wouldn't make money. If you decide to want to keep full coverage or collision/comprehensive whatever it is, then definitely pay on the student loans. One thing I would look at (if you're one of these interested in mitigating risk) is how much your car is worth. I looked up on KBB a 14 FRS in my state at 65000 miles Good condition 10200-11900 trade in value. Unless you have GAP Insurance(another useless coverage), I would at least pay a little extra into your car to make sure you're not upside down and make sure to stay ahead of the value until you do pay it off.
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09-13-2017, 01:33 PM | #44 | |
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I thought insurance usually covers based on private party value in the area the car is located? Which for me is about 15-16k according to KBB. I agree with the idea a lot of things are over insured... Either way the safest thing to do is just pay down the student loan I reckon. |
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09-13-2017, 02:46 PM | #45 | |
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I found this somewhere online, unverified but it's what I've always heard. Each insurance company has its own methodology for deciding if a car is totaled and establishing its value. Many states also get into the act, further sharpening the total-loss definition.
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09-13-2017, 03:54 PM | #46 | |
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I have asked in the past... they will not tell me the $$ amount they value the car. |
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09-13-2017, 11:24 PM | #47 |
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Also, if you really want to run the numbers, you can use an online amortization calculator. This lets you plug in the info and you can see for yourself how much you'll save paying off one over the other and then factor in potential insurance savings.
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09-14-2017, 07:43 AM | #48 | |
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For example, if you have a loan with a balance of $1,000 @ 3% interest and another of 10,000 @ 10% interest, does it really make sense to focus your efforts on the 5% loan first just because it has the highest interest rate? Adding zeros to the end of each doesn't make the decision make any more sense. (10,000 vs 100,000 etc). If the balances are equal (or close) then yes it does make sense mathematically to focus on the highest rate first.
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09-14-2017, 10:39 AM | #49 |
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oh when I went to school, it was literally called and intrest free grace period, the only stipulation was you had complete the program not drop out but probably changed since then to be honest.
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09-14-2017, 11:14 AM | #50 | |
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So I think with the government front-loading more money to students, they kind of entrap them with the idea that they have money to spend, when they really don't and hit them with stealth fees hidden in plain sight. I know a ton of people who spend the grants they receive because they are just silly amounts of money (talking like 3000$+ in grants)...
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09-14-2017, 11:40 AM | #51 | |
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A loan for 1000 at 3% for 12 months will pay out [s]$16[/s] $30.47 in interest. A loan for 10000 at 10% for 12 months will pay out [s]$550[/s] $1047.13 in interest. So paying off the larger loan sooner will save up to [s]$534[/s] $1016.66. Obviously, that may not be entirely practical, but money is money and the OP gives the impression he's in a position to pay off one or the other. I'd really love to see the remaining terms on both the loans. It would make the answer obvious. Last edited by Dake; 09-14-2017 at 01:33 PM. |
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09-14-2017, 11:40 AM | #52 | |
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Seems to me, as I put my 3 three sons through college, "student loans" have basically become lightly veiled signature loans that have no direct correlation to the actual cost of attending college. Fortunately for them, they will all graduate without college debt because I insisted they attend colleges "within their means".
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09-14-2017, 11:57 AM | #53 | |
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In the end (in my simple way of looking at it) your debt is one big number with some composite interest rate against it. So in your example, you have $11,000 in debt with a combined interest payment of $566 a year. Anything you are comfortable in doing to reduce the overall amount owed quickly is a good thing, so there is not real bad answer. That was my primary point.
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09-14-2017, 12:09 PM | #54 | |
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Much like your sons, I am probably of the small percentage of students that will have little to no debt after leaving post secondary. It's not hard to have no debt when you know how to avoid it, but many of today's students are blindsided and inexperienced. Avoid school debt like the plague, it will creep up on you much like buying a car that is greater than your annual profits.
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09-14-2017, 12:12 PM | #55 | ||
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Am I missing something here? 10% APR on ten grand for a year is $1000. If you pay off $1000 at the beginning of the year and pay interest on the remaining $9000, you've saved yourself $100. For the 3% loan of $1,000, it is $30 for the year. Quote:
See above. Always pay off your highest interest loans first, especially if you're talking a difference of 3% to 10%. If you go in the wrong order on something really expensive like a house, you will end up costing yourself thousands in the long run. |
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09-14-2017, 12:22 PM | #56 | |
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Go to a car website, Subaru for example and attempt to replicate the way the calculate interest on a vehicle. It works something like the first few months of payment, the amount of interest that is being paid is visibly lower, but then as the months go on, the payments to the actual car get smaller and the payments to interest begin to grow. It's kind of why you can save money by putting lump sums down on a car, at least, this is how I understand it, I could be wrong though, someone much more intelligent should correct me :P
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