Pay off car or save ?

Kosmik said:
You can also look at it another way. A vehicle is a de-preciating asset. If you pay it off early, you will save the interest but if the vehicle is written off in anything, you would lose more.

My wife's car was written off by some moron in a free ranger. We had just paid it off a year before and yes, we got settlement cash but the difference was 9K amd we still had to buy a new car again anyway.

It depends on your finances and risk.
Click to expand...

My car was payed off too.. and then they stole it. Got R20k out, but had to buy a new car .
 
Sly21C said:
I'm also considering using 60% of my savings to settle my car. A 12.5% interest rate for my car is too much. I'm also contemplating cancelling my car insurance after paying off my car so as to save up more money each month, I believe my car (Ford Figo) is at low risk of being stolen or being hijacked :).
Click to expand...

Thou shalt not cancel thy insurance!
What if you drive into another car and are liable for R100k damage or more?
What if someone drives into you and refuses to pay for YOUR damage?
Seen far too many sob stories of people trying to save a few bucks a month and losing thousands.
 
I was thinking of paying my car off too but was told that you'd be penalized by the bank for paying it off too early because they then lose out on the interest? Is this true?
 
abzo said:
I was thinking of paying my car off too but was told that you'd be penalized by the bank for paying it off too early because they then lose out on the interest? Is this true?
Click to expand...

They are not allowed to penalise you for early settlement.

My monthly car finance statement shows this:
Outstanding Capital Balance : R 127,969.02
Actual Contract Balance : R 157,847.48

So I could pay off the capital balance right now and save myself 30k over the term of the loan. If only.
 
Sly21C said:
I'm also considering using 60% of my savings to settle my car. A 12.5% interest rate for my car is too much. I'm also contemplating cancelling my car insurance after paying off my car so as to save up more money each month, I believe my car (Ford Figo) is at low risk of being stolen or being hijacked :).
Click to expand...

Not a wise move, considering the high risk of accidents in SA's cities.
 
If its possible even if you owe only R1 on any debt and are in a position to settle it DO EEEEEEET. For the simple reason that something might happen and you wont have that R1 to settle it end of the month. My english is failing me now :P "Hoe minder geld jy voor MOET man staan einde vd maand hoe makliker deal jy met onvoorsiende K@K" Life is what happens when making other plans.
 
J
Sinbad said:
They are not allowed to penalise you for early settlement.

My monthly car finance statement shows this:
Outstanding Capital Balance : R 127,969.02
Actual Contract Balance : R 157,847.48

So I could pay off the capital balance right now and save myself 30k over the term of the loan. If only.
Click to expand...

Thanks. Mine is similar. Can't pay it all off right now but just want to put in about R15k (5 months worth of installments). Think that's a good idea? Or is that an insignificant saving in the long run?

Is outstanding capital balance the loan amount you took?
 
Last edited:
abzo said:
J

Thanks. Mine is similar. Can't pay it all off right now but just want to put in about R15k (5 months worth of installments). Think that's a good idea? Or is that an insignificant saving in the long run?

Is outstanding capital balance the loan amount you took?
Click to expand...
The outstanding balance is the amount still left to pay off excluding interest.
Loan amount was around R145k
If you've got the 15k to put in, it's probably worth it. I have a couple of K I'm considering putting in as well, just want to check with Wesbank that I can do it without confusing them.
 
Kosmik said:
You can also look at it another way. A vehicle is a de-preciating asset. If you pay it off early, you will save the interest but if the vehicle is written off in anything, you would lose more.

My wife's car was written off by some moron in a free ranger. We had just paid it off a year before and yes, we got settlement cash but the difference was 9K amd we still had to buy a new car again anyway.

It depends on your finances and risk.
Click to expand...

Not sure I understand what this means, whether or not you pay the car off has nothing to do with what happens if the car itself is written off surely. You'd still owe the bank the outstanding amount, except now you'd need to buy a new car?

I'm assuming you don't cancel insurance when you pay the car off.
 
With some car loans you have to pay a penalty of 3 months of instalments if settling early. Think it only applies to loans where the initial amount is over R300k and whether there is a residual amount etc. This was a couple of years back. Not sure if this changed after the CPA came into effect.
 
Good thread. I was just wondering about this stuff recently.

My problem is as follows though:
I still owed R65K on my car just before the end of last year. I have R120K in savings. So just before the holidays my car was written off. Nothing extra was paid out but the vehicle is at least settled. :(

Anyway, I now have a new car and owe about R120K on it (capital).
Would it be worth it to take R60K and put it down on the Capital owed?
The problem is I have it insured for the retail value which is currently only R89K so I'm guessing it's a bad idea. A quick guess tells me that it would probably better to consider that once I break even on my payments, in say, two years or so.
 
SaiyanZ said:
With some car loans you have to pay a penalty of 3 months of instalments if settling early. Think it only applies to loans where the initial amount is over R300k and whether there is a residual amount etc. This was a couple of years back. Not sure if this changed after the CPA came into effect.
Click to expand...
You are quite right. The settlement amount reflecting on the statement already includes the 3 months worth of interest penalty. This is applicable for most loans not just car loans including unsecured loans (personal loans). CPA has no effect on that IIRC.
 
Spoke to the bank earlier, these are the details that I got.

Financed amount : R123 603 at 13%
Interest : R40 400
Balance : R103 261
Settlement amount : R86 924

So if I settle now i'll save around R16k.

I just don't understand how they calculated the interest to be R40 400
 
Sinbad said:
Thou shalt not cancel thy insurance!
What if you drive into another car and are liable for R100k damage or more?
What if someone drives into you and refuses to pay for YOUR damage?
Seen far too many sob stories of people trying to save a few bucks a month and losing thousands.
Click to expand...

Valid points, my motto is that life is a risk and sometimes one has to take risks :). I might take 3rd party fire and theft just to cover another road user.
 
JungleBoy said:
You are quite right. The settlement amount reflecting on the statement already includes the 3 months worth of interest penalty. This is applicable for most loans not just car loans including unsecured loans (personal loans). CPA has no effect on that IIRC.
Click to expand...

Mentioning the wrong legislation here, the NCA (National Credit Act) is the relevant one and that prohibits any penalties for early settlement
 
supersunbird said:
Mentioning the wrong legislation here, the NCA (National Credit Act) is the relevant one and that prohibits any penalties for early settlement
Click to expand...

I paid off and settled my car a few days ago and I didn't incur any penalties.

Feels good to be debt free :)
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X