Refi and cash out to pay off truck.

[Johann]

We are closing on Thursday. Going from a 4.5 Adj to sub 3 percent Fixed and rolling some CC bills that got away from us as well as my Trucks $7000 or so left (at 4.25%). Keeping to the 10 year pay off schedule we had left on the mortgage. Will lower our monthy out of pocket substantially, provided we can keep the CCds in check.

Any pitfalls or things I should look out for paying off the truck early? Its with a different Bank (BBT) than the mortgage ( Credit Union). Best way to pay them? Electronic since they are an hour away? Never done this.

 

[TRINDU]

Is that $7000 in payments over the next 10 months or 2 years? You're already in the hole, I'd personally rather have the cash on hand. You do you.

Otherwise, call up bank and ask for a "10 day payoff". Send the check and theyll mail you the title. Pretty painless if you're in no hurry. If it's a small town branch, they may have the title on hand.

 

[Johann]

Is that $7000 in payments over the next 10 months or 2 years? You're already in the hole, I'd personally rather have the cash on hand. You do you.

Otherwise, call up bank and ask for a "10 day payoff". Send the check and theyll mail you the title. Pretty painless if you're in no hurry. If it's a small town branch, they may have the title on hand.

Just under 2 years. I'm interested in not having the debt or monthly payment. I do not make a lot of money and that truck payment is getting in the way of paying off my CC every month I like I should. If I have the cash around I'll find something to spend it on!

I'm in no hurry. This month is already paid. I'll give them the "ten day payoff" call. Thanks for the heads up on the lingo!

I plan on driving it into the ground like I do with all of my junk.

 

[westracing01]

This isn't stupid, but it might not be super smart either.

Simplified math...

$7k @ 4.25% over two years is $7300

$7k @ 3% over 10 years is $8111

Basically, you're paying a lot more to do it this way than if you just paid for the truck like normal.

I've also learned, the hard way, that everytime someone says, "I'm going to pay this off and then never rack that up again. I'll put the money in savings, etc." they're lying to themselves. Without discipline and a complete rethink of habits, that won't happen.

 

[mobil1syn]

I do not make a lot of money and that truck payment is getting in the way of paying off my CC every month I like I should. If I have the cash around I'll find something to spend it on! 🤣

sounds like youll be in a new truck and in CC debt in no time

 

[TrikeKid]

I've also learned, the hard way, that everytime someone says, "I'm going to pay this off and then never rack that up again. I'll put the money in savings, etc." they're lying to themselves. Without discipline and a complete rethink of habits, that won't happen.

Having done it, I gotta say this is painfully accurate. I consolidated my credit card debt into a personal loan to cut down the interest, and made the mistake of not closing those accounts once they were paid off, now I've just got the loan payment and CC bills.

 

[Johann]

This isn't stupid, but it might not be super smart either.

Simplified math...

$7k @ 4.25% over two years is $7300

$7k @ 3% over 10 years is $8111

Basically, you're paying a lot more to do it this way than if you just paid for the truck like normal.

I've also learned, the hard way, that everytime someone says, "I'm going to pay this off and then never rack that up again. I'll put the money in savings, etc." they're lying to themselves. Without discipline and a complete rethink of habits, that won't happen.

I appreciate the feedback. There is more CC debt that we are rolling in, mostly my wife's, than I'd care to admit. At a much higher rate and there is no way we would be able to get out from under it. The truck payment plan was a way get me out from under something as well.

The monthly payments to the CC and the truck add up to way more than our mortgage payment will increase but the time span does matter. I fully understand what you are saying about letting the debt rack back up. I've only financed two other vehicles in 35 years of driving. Once they are paid off they get repaired and driven until they can't be. Still DDing a 2000 WJ and my wife drives a 98 XJ.

Without a truck payment I was staying on top of my CC and paying it off every month. I am resolved to get back to that. I am going to have to keep on my wife to do the same as it is the only way they actually work FOR you. The big challenge is Amazon. Too easy to put that on the CC!

 

[Johann]

sounds like youll be in a new truck and in CC debt in no time

I hope to prove you wrong!

 

[Provience]

turning a 2 year note into a 10 year note is, in my opinion, a bad idea. if you are being buried by it, is there a way to compromise with a different term on a separate loan? any equity in the vehicle that would make it reasonable to sell of and get a similar capacity thing that is cheaper?

 

[Ted_Kaczynski]

woods can tell you how pay for a truck.

​​​​​​​Do the math, take the cheapest out, then NEVER go back unless their money is working for you.

 

[landscraper]

If the CC is too much to get out from under, roll that into the refi. Leave the truck note off of it and keep paying as usual. The drop in APR should cover the payment on a 20 year old Jeep and your cash flow should feel the same.

If you do add the Jeep note to the refi, pay it's monthly payment against principal in addition to your monthly mortgage payment.

 

[ExWrench]

Whenever you go to a lower interest rate, you're paying less money to rent money --> winner.
If you take that as an opportunity to pay off your debt quicker, you're money ahead --> winner.
If, instead, you make minimum payments & buy more shit, you'll always be broke --> fook dat.

Get lowest interest rate(s) you can on all debts & pay off highest-interest debts first.
You'll not only pay off your house quicker, you can save 100k+ on interest over time.

 

[subybaja]

Whenever you go to a lower interest rate, you're paying less money to rent money --> winner.
If you take that as an opportunity to pay off your debt quicker, you're money ahead --> winner.
If, instead, you make minimum payments & buy more shit, you'll always be broke --> fook dat.

Get lowest interest rate(s) you can on all debts & pay off highest-interest debts first.
You'll not only pay off your house quicker, you can save 100k+ on interest over time.

You're leaving out time. Refi to a lower rate isn't better if it resets the clock- in general.

 

[Ted_Kaczynski]

Whenever you go to a lower interest rate, you're paying less money to rent money --> winner.
If you take that as an opportunity to pay off your debt quicker, you're money ahead --> winner.
If, instead, you make minimum payments & buy more shit, you'll always be broke --> fook dat.

Get lowest interest rate(s) you can on all debts & pay off highest-interest debts first.
You'll not only pay off your house quicker, you can save 100k+ on interest over time.

Unless there are fees or points to get to that rate. Always do the total compounding math with fees and points. Lower rates don't always win. All variables must be mathed to make a good decision. When you're borrowing/financing, you and your paycheck are the product.

 

[Silverback07]

We are in the process of a refi, got 2.5%, hope to close next week. Anyhow we are just taking the money we would be spending extra and putting it into my truck payment. It should be about $400 savings so that should help drop the truck note quickly. Truck was financed at 2.3% so no sense rolling it into something with a higher % rate. But the place we are refi'ing with is S L O W!! Our locked in rate expired yesterday and they paid to keep it the same. Guy we are dealing with just said they are getting slammed with applications.

 

[woods]

woods can tell you how pay for a truck.

Do the math, take the cheapest out, then NEVER go back unless their money is working for you.

Yawp. 5.1% from Ford. Switched to CU after first month. Got interest to .9%. Made ~double payments. Five year loan, paid off in three. Done.

 

[ExWrench]

You're leaving out time. Refi to a lower rate isn't better if it resets the clock- in general.

Yeah, sorry, I was looking at it from the standpoint of killing debt, & assuming making payments beyond the principal whenever possible.
We re-fi'd from a 30-yr fixed to a 15-yr fixed, then lived like fookin' monks so we could pay it off in 7 yrs - we saved >$100k in interest

I detest debt, so I'm stressed right now because we're looking at going from ~zero to ~$500k in debt to have a better house + land.
I expect to live like a super-cheapass if we do, with a slightly unreasonable goal of killing that 30-yr mortgage in ~10 years.
If we're lucky, we can live a few years in the paid-off house of our dreams before it's time for the big dirt nap.

Unless there are fees or points to get to that rate. Always do the total compounding math with fees and points. Lower rates don't always win. All variables must be mathed to make a good decision. When you're borrowing/financing, you and your paycheck are the product.

Yep - I way dafook oversimplified

Long story short: "figure out the total cost of each option, pick the best one, & pay that shit off ASAP" is my method.

 

[dntsdad]

Without knowing more it sounds like the smartest move would be to keep the truck loan. Don't refi that extra 7k and keep it off your mortgage and as equity.

You are paying your CCs with the refi so you should have that extra cash monthly that were going to CCs......probably the minimums I would assume.

If you kept the truck loan and compounded the money that was going to the CCs you could pay off the loan a hell of a lot sooner. How soon? I don't know cause I don't know the amount you were paying each month to CC companies.

Only you know if you have the discipline to do that though. If you are honest wtih yourself and you don't, then I'd probably go the route you are on and let your equity pay the truck off.

I would also agree if you don't have the discipline for option #1, you will right back in the same boat within 2 years.

It takes a lifestyle and attitude change from you and your wife.

 

[Johann]

turning a 2 year note into a 10 year note is, in my opinion, a bad idea. if you are being buried by it, is there a way to compromise with a different term on a separate loan? any equity in the vehicle that would make it reasonable to sell of and get a similar capacity thing that is cheaper?

That is an interesting thought and I'll have to quiz my mortgage person at the credit union tomorrow to see if it's possible. But the truck is older than the credit union was interested in financing to begin with so unless we're looking at a personal loan or the like I'm not sure if I win on that one. Not sure if the personal loan rate is lower then what I got through the other bank for the truck. And I plan on keeping the truck cause I actually use it unless I get in serious financial trouble.

I have a couple of projects that need to go way before our youngest vehicle goes!

 

[Johann]

Without knowing more it sounds like the smartest move would be to keep the truck loan. Don't refi that extra 7k and keep it off your mortgage and as equity.

You are paying your CCs with the refi so you should have that extra cash monthly that were going to CCs......probably the minimums I would assume.

If you kept the truck loan and compounded the money that was going to the CCs you could pay off the loan a hell of a lot sooner. How soon? I don't know cause I don't know the amount you were paying each month to CC companies.

Only you know if you have the discipline to do that though. If you are honest wtih yourself and you don't, then I'd probably go the route you are on and let your equity pay the truck off.

I would also agree if you don't have the discipline for option #1, you will right back in the same boat within 2 years.

It takes a lifestyle and attitude change from you and your wife.

Thanks for helping me work through this. At this point a hard reset and some discipline may be my best bet. As I mentioned above I've got a couple projects that really need to go which will take some cash to get running. That will make it difficult to overpay my truck note. But it will eventually put a few thousand back in play which I can put towards the mortgage or keep the CC in check.

Goal is to be debt free when I hit 30 years at the museum in 10 years so I can retire at 64. The mortgage will end at the right time. Now I need to keep the rest in line.

 

[dntsdad]

Thanks for helping me work through this. At this point a hard reset and some discipline may be my best bet. As I mentioned above I've got a couple projects that really need to go which will take some cash to get running. That will make it difficult to overpay my truck note. But it will eventually put a few thousand back in play which I can put towards the mortgage or keep the CC in check.

Goal is to be debt free when I hit 30 years at the museum in 10 years so I can retire at 64. The mortgage will end at the right time. Now I need to keep the rest in line.

No offense but some tough love here. That makes no sense and is a shitty plan.

I don't know what your projects are, what they are worth at the moment in either parts of as is as a whole, what they would be worth with $X dollars into them, etc.

Keep the truck loan, sell your projects for what they are worth now (either in parts or whole) even if you lose a little bit vs. what you think you can get for them when "done".

Take the project money, CC payment money and "snowball" it onto the truck loan. Again, I don;t know your real numbers but it seems like you could easily pay of the loan in a matter of months AND make your mortgage payoff goal 7k sooner.

No brainer to me but again, I don't know the numbers. Post up your CC payments/balances, truck payment, project part list/needed/etc. That would help to make informed thoughts.

 

[2big bronco]

Roll your cc over into the refi and keep the truck separate. Use the extra money you are saving plus whatever you were putting towards the truck to pay it off faster. You know you are bad with spending so if things dont go as planned you are turning a 2 year loan into a 10 year.

Starve yourself and pay off your truck inside a year and then you will have the extra cash to not have to use your cc

 

[subybaja]

I detest debt, so I'm stressed right now because we're looking at going from ~zero to ~$500k in debt to have a better house + land.
I expect to live like a super-cheapass if we do, with a slightly unreasonable goal of killing that 30-yr mortgage in ~10 years.
If we're lucky, we can live a few years in the paid-off house of our dreams before it's time for the big dirt nap.

Good luck. That sounds like some worthwhile misery.

 

[pdangerp]

Don’t pull equity out of your house to pay on a depreciating asset. Get a debt consolidation loan to drop the interest rate and get your payment under control.

 

[Johann]

No offense but some tough love here. That makes no sense and is a shitty plan.

I don't know what your projects are, what they are worth at the moment in either parts of as is as a whole, what they would be worth with $X dollars into them, etc.

Keep the truck loan, sell your projects for what they are worth now (either in parts or whole) even if you lose a little bit vs. what you think you can get for them when "done".

Take the project money, CC payment money and "snowball" it onto the truck loan. Again, I don;t know your real numbers but it seems like you could easily pay of the loan in a matter of months AND make your mortgage payoff goal 7k sooner.

No brainer to me but again, I don't know the numbers. Post up your CC payments/balances, truck payment, project part list/needed/etc. That would help to make informed thoughts.

No, tough love is what I posted for. You cant hurt my feelings on the internet.

As far as the projects you are probably right that I should sell them as is and not mess with them. Here is what is sitting around. Nothing special.

2000 Dakota. Runs but needs more AC work. Put a pump on it but it lost charge before I could sell it. Probably pinched a seal. I had already replaced all of the other major parts on a previous refresh. One more weekend should get it going.

93 XJ with long arm & D300flipped & more. Not running. Needs fuel pump & probably tank. And batt and... It just needs to sold as is. Someone will have some fun with it.

73 Spitfire project & two parts cars and a billion parts. Just needs to be sold as is in one lump. Honestly britt stuff is not gaining value. I could break even or more with Ebay and patience but it would take time.

As for the layout of all the household debts, as much as I appreciate the advice, I'm really not interested in laying all of it out on the internet. I am only one part of that equation so I need to be discrete. But we are talking through it and I have stressed how we need to keep the CCs in check. They are the devil!

 

[dntsdad]

No, tough love is what I posted for. You cant hurt my feelings on the internet.

As far as the projects you are probably right that I should sell them as is and not mess with them. Here is what is sitting around. Nothing special.

2000 Dakota. Runs but needs more AC work. Put a pump on it but it lost charge before I could sell it. Probably pinched a seal. I had already replaced all of the other major parts on a previous refresh. One more weekend should get it going.

93 XJ with long arm & D300flipped & more. Not running. Needs fuel pump & probably tank. And batt and... It just needs to sold as is. Someone will have some fun with it.

73 Spitfire project & two parts cars and a billion parts. Just needs to be sold as is in one lump. Honestly britt stuff is not gaining value. I could break even or more with Ebay and patience but it would take time.

As for the layout of all the household debts, as much as I appreciate the advice, I'm really not interested in laying all of it out on the internet. I am only one part of that equation so I need to be discrete. But we are talking through it and I have stressed how we need to keep the CCs in check. They are the devil!

Fair enough on listing your financials on here. I get that

Fuck those projects though.

MAYBE fix the AC on the Dakota since its summer and all and that is a front of the mind issues for most buyers. If it was winter, no way. Anyone who is shopping for a 2000 Dakota probably isn't the most picky buyer so get it sold for what you can get.

The XJ should be an easy sale

The Spitifre is tougher depending on how large of a city you are in, or close to. More people, more eclectic types looking for that type of project.

I'd have all that shit on CL tomorrow and itd be gone and every penny off to the truck loan.