Boat or Tow Vehicle?

[Shuck Water]

Trying to decide which to pay off first. Owe about the same on each. Planning on keeping the boat longer, but the Tow Vehicle has a higher payment. Thoughts?

 

[BoaterGuy]

Pay off the higher interest loan first, no question about that. Payment amount doesnt matter.

 

[biglar155]

Pay off the higher interest loan first, no question about that. Payment amount doesnt matter.

Agreed... Unless you feel like you're strapped too tight month-to-month then you might want to focus on the higher payment regardless of interest rate.

I've always lived by the "pay off higher interest rate first" rule and in the long-term it IS the way to go to reduce your overall cost. If you chose to do otherwise, then do it with the understanding that you are making a sub-optimal choice in one area (higher interest cost long-term) to optimize something else (more cash month-to-month right now).

There's all different versions of "right," the question is, "What's right for YOU?"

 

[jawsf16]

Actually, higher interest loan only applies with respect to the balance remaining. Remember, interest is front loaded. There are calculators online that can help you evaluate which saves more money in the long run. Punch in your data here and see what you end up with...

http://www.bankrate.com/calculators/auto/early-payment-payoff-calculator.aspx

 

[BoaterGuy]

Actually, higher interest loan only applies with respect to the balance remaining. Remember, interest is front loaded. There are calculators online that can help you evaluate which saves more money in the long run. Punch in your data here and see what you end up with...

http://www.bankrate.com/calculators/auto/early-payment-payoff-calculator.aspx

Thats correct, however he said the balances are about the same. But the duration and time left in the amortization schedule do matter. Nonetheless, that's a helpful link.

 

[maboat]

Pay off the higher interest loan first, no question about that. Payment amount doesnt matter.

I was going to say the same thing, but of course the best thing is to pay them both off and be debt-free!