Payoff credit card debt or auto loan - The Bills.com Blog
Bills.com Blog > Loans Questions > Payoff Credit Card Debt or Auto Loan
Payoff credit card debt or auto loan
Question: I have about $17k, in credit card debt, and I just got a return of $17k on an investment. My wife and I are in need of a 2nd car... Should I pay off all my credit cards and finance the car, or should I put the 17k toward buying a car? Thank You, Phil M.
Answer: That is a very good question - which involves relative rates andspecifically where the highest return on your money is.
If the interest rate on your credit card debt is higher than the interest rate on your auto loan (which is almost always the situation), then you should pay off the credit card debt. The benefits are less money going to cover
interest fees and possibly a lower monthly payment. Ideally, you would use the extra cash flow to pay down the total debt amount faster, getting debt free in a shorter amount of time. Be sure not to "run up" your credit cards once they are paid off!
If you would like more information,
please visit us online at bills.com. We have also attached a free guidebook on budgeting and financial planning, including a section on getting debt free.
We hope that this helped you to Find, Learn, and Save!
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
Submit questions/comments about this post:
Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!
© 2006 - 2008Bills.com LLC. All Rights Reserved.
Your One Stop Resource for Saving Money.