auto loan rates

May 28, 2010

Question about my finances. Using overage check to pay off auto loan a good idea?

Sicks asked:


I have just started college. I am really enjoying it. Especially after being out of high school for 4 years. Anyhow, I am back into it and I have qualified for financial aid. It is an unsubsidized loan, with a total of a little over 6k. It is my first loan, and I intend to pay every bit of it.

My employer reimburses up to $5,200 a year, which is more than enough to pay for a year’s tuition at my college branch. If my calculations are correct, I should receive an overage check of about 4k, which is the same amount I have left on my auto loan.

I am being nailed on interest for the auto loan, which is 14.2 percent — I had no credit, no co-signer — so I had to bite the bullet of an extraordinary rate. So, I figure I will take the full amount of my award this once and pay off my auto loan. It will give me peace of mind because if I lose my job, I lose my car. But if I pay off the car, I can lose my job, but still keep going to school, for I do not have to pay back my loans until after I graduate. That way I can pay about $100 a month toward the overage check, paying it off well before I graduate.

So, for the people that have had much experience with their finances, been through many hardships, tell me, is this a good idea? Am I thinking on the right track for a young age — 23?

Also, the last time I asked this question, the answers were all from spammers promoting their websites. Please, refrain from that.

Neil

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