Is it worth paying the reaminder of my car loan off?
Is it worth paying the reaminder of my car loan off?
I got my car (2020 Ford Fusion Hybrid SE) new 3 years ago at $25k for a 6 year loan @ 0% interest for entirety of loan, $350 a month payment. I'm about halfway paid off and have about $12.5k left on it. What should I do? I just get sick of paying $350 a month.
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Does that $350 include car insurance? Once you pay off the lien and own the car, insurance should be a lot cheaper.
Why would insurance be cheaper?
Because liability car insurance (just covers damage for who/what you hit) is cheaper than comprehensive car insurance (also covers you and the car).
Finance companies will usually require you to have the latter through the end of the loan.
If you drop your coverage from comp/collision to liability only, you're paying less, and assuming more risk - because if you get in an accident, your insurance will not cover the cost of repairing your car (or receiving a payout if it's a total loss). A 2020 model year car is still worth having comp/collision coverage on.
Glad I wasn't the only one who thought suggesting liability only ins on a 3 year old car was a silly suggestion.
Really the only reason you'd want to go liability only is if you own the car outright, and the insurance value of the car is very low. If you have a $500 deductible, and your car is only worth $1500, you'll get paid $1000 on a total loss - which would be just about any accident whatsoever, even one that would leave the car safely driveable. It wouldn't make sense to make a claim that would only give you $1000, and make you have to buy a new-to-you car and take on payments again, so it doesn't make sense to pay for that coverage in the first place.
Because as long as there's a lien on your car, the bank that owns it wants to make sure it's thoroughly insured until it's paid for. Their insurance is mandatory and usually much more comprehensive (and expensive).