Should I save for a car down payment or pay off my loan first?

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  • #122598 Reply
    USER

      I will need a new car in the next year or two… almost 200,000 on my current one. Is it better to save money to put down a down payment on the future car or pay off a fixed loan that I have?

      Loan is $16k for emergency medical debt. I have 3 years and 6 months left on it at 9.75%.

      No other debt besides mortgage. Realistic thoughts?

      #122599 Reply
      Scott

        Not only do you need to pay off that debt before buying another car. You need to save up the cash for the next vehicle as well.

        I’d get on a budget and start grinding as soon as possible.

        #122600 Reply
        Lauren

          I would pay off the $16k loan because of the high interest rate. Do you have any spare cash you can put toward it so it is paid off sooner than 3 years?

          Then as soon as you do begin savings for the car.

          Hopefully by the time you need to get one interest rates will be better.

          #122601 Reply
          Allison

            At 9.75% I’d get that paid off before investing any more. And then I’d plan to have cash in hand to buy a new car because at least right now interest rates are higher than I would consider holding a loan for.

            200k miles doesn’t necessarily mean you need a new car, depending what your car is.

            I’m still alternating a 325k mile 21 year old car as my daily driver – and I drive about 200 miles a day

            #122602 Reply
            Sammy

              My Honda is 260k miles, and it still runs fine. Cars can go past 200k miles, depending on your maintenance.

              Btw, I would pay off that loan first before considering a new car.

              #122603 Reply
              Shelley

                If you can pay it off faster, you’ll free up cash flow for your future car payment or down payment. Put some money toward extra loan payments while also setting aside some for a car down payment.

                If it’s running fine for now, paying off high-interest debt first is smart.

                If it starts having expensive repairs, you might need to shift focus.

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