stratagy to pay off car loan.

ziobryc · #1 (**permalink**) 03-26-2010, 09:16 AM

hello,
I wanted to know what others say about my plans to get out of debt and
stay debt free.
Anyways about my debt,
I made some stupid choices in my life but this was the worst.Young and foolish
I went out and bought a sports car for $16K after taxs , but my apr was 22.9%
back in 2005 , so far i manage to pay off $6k which now i owe $10k on my loan.
I tried to sell the car but no luck.
I'm paying $320 per month , figure i could save more if not for that loan.
While working at my low paying job ,I come up with this stratagy.

1: withdraw $7000 from my 401k added $3k out of pocket and pay off my loan.
2: Now that I'm debt free I can contribute more of the money (payroll) back into my 401k.
3: later down the road sell the car for $2-$3k lesser and put that money back into 401k , think as a reimbursement.

hows does that sound guys?.

sapphirecapital · #2 (**permalink**) 03-26-2010, 02:25 PM

can do but there is a tax problem when taking money from the 401k, why not get rid of the car now and pay the rest of the loan with the 3k you have in hand and leave the 401 k alone? seems you want to keep the car anyway!?, the 401k can be an option if you are young, don't touch it if you are above 40

ziobryc · #3 (**permalink**) 03-27-2010, 11:03 AM

I thought of that too , but the value of the car drops fast, unless i can sell it for $5k no one will buy it.

sapphirecapital · #4 (**permalink**) 03-27-2010, 01:37 PM

what kind of car is this?

isralexba · #5 (**permalink**) 03-27-2010, 06:12 PM

hi,
if you'll sell the car and get the max amount of money, will you still need to buy another one? if so - then think twice before selling as it was already depriciated signidicantly.

coach2wealth · #6 (**permalink**) 03-27-2010, 07:15 PM

Sell the car for what it will bring. Get a credit union or small bank loan for the difference. Drive a very used car while you clean up the mess. Save and pay cash.

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