I am in a quandary right now. One of my goals is to pay our car loan off by summer of 2010, which would be 1 year early. I called Capital One today to make a principal payment and was told that they no longer accept payments toward the principal -- huh? I was told that I had to pay more than our normal monthly payment and the difference would be put towards the principal. Problem is, the payment is automatically deducted from our checking account so there isn't any way I could pay the monthly payment amount and the extra payment together. I was told I could either call Capital One and make a payment over the phone which would cost met $15 every time I did that or mail in a payment. I'm not paying $15 every month in order to pay my car off early and I'm not comfortable mailing in the payment and when I tried last week to make a payment online it would not allow me to pay less than our normal monthly payment. Frustrating! So, I think I will pay the loan off with our HELOC. The interest rate on our HELOC is tied to the prime rate, which currently stands at 3.25%. I think the fed may be cutting interest rates again, possibly today, and if they do prime rate will likely be 3%. I'm going to my bank today to inquire about locking in the rate. Our car loan is at 6% interest, HELOC interest is tax deductible and the car loan interest is not. My quandary is that if I do this we will have an $11,000 second mortgage. I am not worried about job security for my husband or myself, so our ability to make the payments is not an issue, just the thought of having a 2nd mortgage is a little scary. I think I pretty much have my mind made up about paying the loan off with the HELOC, and DH is ok with it too, I'm just nervous.
Car Loan Payoff Quandry
January 26th, 2009 at 09:30 am