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Pondering A Thought

July 4th, 2020 at 03:12 pm

Happy Independence Day!

Over a year ago we bought our daughter a used Subaru to drive. She had her license two years prior, but never had a need for her own vehicle. The purchase price was around $11K and it has a been a really great car so far. We put $3K down and she used the proceeds from a UTMA account she had which was maybe $3400. I'm being lazy, I don't remember all the exact numbers.

We did take out a small loan ($5,700 at 5.75%!) because we did end up buying a more expensive vehicle than we originally planned. The cars we found we could buy for cash, were just not good to buy for a young person living across the country from parents, at least in our minds. The loan was to help bridge the gap so that she could take over payments when she got a job, and at the same time get some credit in her name. She is still looking for a full time job in her field, but has an internship that increased her hours recently.

We are pondering paying off the balance of the car which is owned jointly between her and my husband. The balance is $4,293, with three years left. We have so much cash and now earning very low interest rates. We would then have her pay us back with interest. I'm thinking 3% interest, and we are open to a longer payment term if she wants. A lesson in how that changes the payment and the total interest she pays would be good I think. The vehicle would be owned jointly until the loan is paid back.

I will be running the numbers and offering her a proposal. I think she can start making the payments even on her low income since she is currently staying with my parents. Such an interesting time we are in.

Posted in Family, Debt, Income | 7 Comments »

7 Responses to “Pondering A Thought”

  1. Lots of Ideas Says:
    July 4th, 2020 at 04:10 pm 1593875400
    1593875400

    I think this makes perfect sense.

    No need to pay high interest rates while earning low interest on money in the bank.

    And you know that she is dependable.

  2. mumof2 Says:
    July 5th, 2020 at 11:14 am 1593944084
    1593944084

    yep I agree sounds like a great plan

  3. My English Castle Says:
    July 5th, 2020 at 05:31 pm 1593966707
    1593966707

    Certainly makes sense,especially in this low interest environment

  4. Amber Says:
    July 5th, 2020 at 07:53 pm 1593975194
    1593975194

    I like the idea.

  5. LifeBalance Says:
    July 6th, 2020 at 01:42 pm 1594039322
    1594039322

    It makes good sense to me. It's a win-win: you'll make more interest than you would otherwise and she'll pay less interest than she would otherwise. And you all reduce your dependence on banks for the deal.

  6. LivingAlmostLarge Says:
    July 7th, 2020 at 05:51 am 1594097517
    1594097517

    sure why not? Will you just gift her the car for graduation though? Not sure if she just graduated.

  7. rob62521 Says:
    July 7th, 2020 at 03:49 pm 1594133386
    1594133386

    I think this makes a lot of sense.

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