Your advice on my situation?

First, I put this post here because I stay in the 2nd gen more but if mod wants to move it no problem!


Ok so I am 21, going to college, no job....(mom says I dont need one as long as I keep a 3.0 or higher) but hopefully February I'll have one.

My family just bought me a truck couldn't be happier!!

Ok now where you older people who have already been here come in to play.

I know I am lucky, I thank God everyday for the things I have.


I wanted to lift my truck, get tires, bumper etc...... but I have now been considering to just start putting 500-800$ a month on top of my families payment towards my truck. To the principal to help pay it off sooner.

So how exactly does this help, will it eventually get my payment lower? What are the benefits of this.


Sorry this is my first purchased vehicle that I/we owe money on.


Thanks for your advice guys!



Edit, also would you guys get your truck the way you want first then pay on it more, or pay on it and if you see a really good deal possibly pick it up?

 

There are two ways it can help depending on how you put the money towards the payment:
1) Advance payments. For example your families minimum payment is 500 dollars. If you pay 500 more dollars without specifying "Principle only" the company will most likely apply that extra 500 dollars to next months payment. It will get all the money to the company early....but it doesn't save you any money in the long run.
2) "Principle only payments" lower the amount of money you get charged interest. If you pay one month's payment- Part goes to interest, part to the principle. The next month when interest is calculated it's on the projected amount. If you pay extra to the principle before interest is calculate-The principle is lower and you owe less interest.

If you've got 500 bones a month extra to pay- put it toward "Principle Only" payments...

 

Gotcha still kinda hard to follow I understand the first part but not the 2nd part whe it comes to interest calculate and stuff lol.


Yeah the payment is 419 I think, so I would be paying like this

one month = 500
next month 7-800
following = 500

So just throwing it back and forth, like every other month 7-8.

So when I give it to them, tell them thats for the principal only right?

 

What a great family you have and you're thoughtful to try and help them help you by adding to their payment on your truck. It'll pay it off sooner and lessen their burden. My advice is to help them, but also put a bit of money aside to modestly mod your truck. There are lots of things you can do without spending a lot. You can also keep an eye out for used equipment. Take the middle road and congrats to you for your attitude.

 

I think Im following you and wow thats crazy, gives me good motivation!!!

 

Pay it off as soon as you can. When you get out of school and get into "real" life, in the sense that you have to pay your own way for everything, you'll be very glad you don't have a truck payment on top of things. I wish I'd been more forward thinking at your age (I'm 31) or I'd be farther along than I am now.

Realistically, getting a job after college isn't always the easiest thing, and the job market may still be limping when you get out. Don't leave yourself in a hole if you can afford not to. You could be a long way ahead of your peers a few years down the road. Not an easy decision to make, but probably the right one, and one I wish I'd made.

I agree with the prior post. Paying off the truck sooner = less interest paid, as long as there's no penalty for early repayment. It won't make your payments less - you'd have to refinance and re-amortize the loan for that - but it means the truck has cost less over the life of the loan. It means you've paid less.

Wish I was in a situation where this was my most complicated dilemma. Enjoy that simplicity while you can.

 

Thank you sir!

Yeah that is kinda my plan just help them and then if I find a really good deal on some billys then pick them up, just slowly over time build her.

When I get new tires I'm going to go up to 265's right now rockin 245's lol they look small.

So for now money is being put away for my tires.

I love my family I try to help them a lot, and I was looking around and was like I should help them instead of modding my truck first.

I have wanted this truck since I was 15 they made my dream come true so I can atleast help them in return!

 

Thanks, I know real life sucks LOL

This is defiantly not my most complicated dilemma man I wish it was but thats ok..

Just keep my head up and work hard and hopefully it will all work out.

Yeah it was kinda a hard decision but it wasn't if that makes sense.

Mod my truck like all hell or help pay my truck off?


(for me it was easy, I said grow up and help pay the truck off)
^ thats for me I'm not saying people who mod there truck while owing money is dumb.

I kinda figured that would be everyone's response (which I was hoping) I was just hoping someone would explain the whole loan thing to me which it was.


Thank you guys for your quick and wise input!

 

I second the motion to contact the bank/loan agency that has the contract for the vehicle........depends on what your family has setup with them, and what guidelines are in effect........there could be "prepayment penalties" that would charge you extra for early payoff, so you need to ensure they accept overpayment monthly/weekly........just be sure your money is going where it should, and that's the principle only........you're going to save considerable interest for every month it's paid off early, but again that depends on the loan terms and how interest is figured into the payments.......typical auto loans compound the interest rates that gradually reduce over the course of the loan term -- so payments in the beginning will be approx. 90 percent interest, and your last payments are typically all principle.........Oh, and congrats on the new taco!!!

 

Def pay it down early if you don't get penalized. But save some money still for unexpected events. Stick to basic mods like the tires you mentioned. I just went from 245's to 265's and love it. No added wear and tear on the truck either. You seem to have a good long road approach, but like others said getting out of school and finding a job isn't always easy. Save some $$$ for the transition period. And interships are a great way to slip right into a job after school. You get to prove yourself while thier getting a deal. Beautiful truck!

 

Thanks I will have family talk to them and make sure there are no penalties on paying early and report back, if there are then I will talk to you guys again.

Is that regular? Penalties for paying early?

Thanks, yeah jobs are not easy to find. I'm going to school for FF, Paramedic, Bachelors in Fire Science and I am on a Volly FD. So hopefully it wont be to bad to find a job (not holding my breath).

I have roughly 2k$ saved up for a emergency event on the taco, then some stashed for just in case money.

I worked 2 full time jobs when I was 18 (left mom and dads), and could barely afford rent, food, bills. I know how hard it is/could be. So I try to prepare!


Edit, awesome on the tires I check Craigslist everyday hoping to find some LOL

Looking at the BFG A/T's, they're like 225.99 here ouch!!!

 

I would say you are an extremely lucky guy. I would assume your parents are paying for college too. I hope to be able to do the same for my daughter someday. My parents payed for my college and I blew it off and wound up getting kicked out. They bought me a truck too, but it was a $900 84 Toyota. It's good to see you thinking about taking some responsibility for paying for the truck instead of taking it for granted like I did back when I was 18. But yes if you pay extra on the truck it will get paid off a lot quicker. I bought an 05 new, financed it for 5 years, and paid a few hundred extra on it just about every month. It was paid off in 08. And don't worry about doing every mod in the book on the truck. Yes tires are important, but I wouldn't worry about a lift, bumpers etc. until you truly have the means to pay for them. A good set of 265/75/16's with an aggressive tread will make it plenty capable off road. And take good care of the truck and don't beat the crap out of it like I did at your age. Believe me it's nice having stuff that's paid for and isn't beat. Especially once you're out of the nest paying your own way for real.

 

You had a few very good advices so far. Pay it into the principal. The amount of interest you pay, is equal with the length of time the bank's money are tight in your truck, period. The mods can wait, last year I responded one guy's tread who had $12.000 in mods, and he was into a 6 year loan of $550.00 a mounth....STUPID
So far you look to me to be a down to earth solid thinking young boy. It is good, prize God for it and keep your feet on the ground. Hug your parents and have a wonderful life.
Take care
vbibi

 

While TerryS has a point, I disagree. Pay the truck off. This helps your family who has done a great thing in helping you. As for interest, see below:

example- 1% on 10G's, monthly payment is 500 bucks and that is all you pay:
first month, you get charged interest on the full note, 1% of 10K is 100 dollars, so the first hundred dollars of your payment go to interest and the rest to principle which is 400. Now you owe 9600
second month, you get charged interest on the remainder of the note, 1% of 9600 is 96 dollars, so the first 96 dollars of your payment go to interest and the rest to principle which is 404. Now you owe 9196.
Third month, you get charged interest on the remainder of the note, 1% of 9196 is ~92 dollars, so the first 92 dollars of your payment go to interest and the rest to principle which is 408. Now you owe 8786.

example- 1% on 10G's, monthly payment is 500 bucks and and you pay 500 extra:
first month, you get charged interest on the full note, 1% of 10K is 100 dollars, so the first hundred dollars of your payment go to interest and the rest to principle which is 400. Now you owe 9600 plus extra principle 500=9100
second month, you get charged interest on the remainder of the note, 1% of 9100 is 91 dollars, so the first 91 dollars of your payment go to interest and the rest to principle which is 409. Now you owe 9191 plus extra principle of 500=8691
third month, you get charged interest on the remainder of the note, 1% of 8691 is ~87 dollars, so the first 87 dollars of your payment go to interest and the rest to principle which is 413. Now you owe 8278 plus extra principle of 500=7778

The numbers of this example are just so I can do the math in my head, but you can see that extra payments on priciple mean that the interest charged monthly is less. then each month is gets dramitically more. This is just part of the goodness. Also, the loan gets paid much quicker which means you will own the vehicle sooner and stop making payments altogether. Hope this helps! PS- try this, it will help you get it!!!
http://www.mtgprofessor.com/Calculators/Calculator2a.html

 

Thanks, I try to take very good care of my truck I love her and respect her.

haha its funny I beat the crap out of previous vehicles because they were just whatever but now that I have this truck I take very good care of it.

I wash it once a week, (washing today actually lol), just changed spark plugs and air filter oh yeah I know what your saying!!!

Also without going into much detail my (real) father passed in the military and they are paying for my college. Otherwise I would most likely not be in college, it sucked to lose him and I still think about it but I know he would have wanted me to go to college and do the best I could!


So I am!

 

WOW!!

Thank you very much I completely understand now thats crazy!!!

Yes 100% putting as much $$$ comfortably to the interest I can..


THANKS!!!

 

Another question!!!


What happens when Im paying towards the principal and something would happen, where insurance would total it out (not saying it, its bad luck to say it but you know what Im talking about)

How does that work they just pay it off and the bank gets what is owed then I get what is left over?

I would be getting another taco and a down payment is nice lol...

Hopefully (knocks on wood) that doesnt happen but I like to be prepared!

 

You are welcome, note that I think you meant principle which will cut your monthly interest charge. Also, someone had said check to see if there are any penalties for paying off early. This could make the extra payments futile so verify before paying extra. Most car loans allow for early payoffs, some require the loan to stay open for only part of the total period, say 2 of the 5 years....

 

Yes, the insurance pays the total value of the vehicle and the loan gets paid first, the rest goes to you.

 

if you have the GAP policy its covered. check your contract