Debt from previous marriage

[FrugalIII]

What would you do? My wife and I divorced a little over a year ago. The financial agreement included me paying off the loan on her car. Once the loan is paid off, the auto is then re-titled in her name only. Because I could not refinance the loan at the time the loan was kept in both names as was the car title. She pays for the portion of the insurance that covers her car. The monthly payment is $700. I want to get this "monkey" off my back. I have 2.5 years left on the loan. Would it be prudent to take the money from my HELOC and pay that loan off just to get rid of it so I can get the car title in her name and be done with it? The interest on the HELOC is 6.5% and the car loan is about 8%. It's not that I can't afford the car payment, I just want to be done with this, get it in her name and get some closure. I don't want this car in my name with her anymore. What would you do?

[maat55]

Going with the HELOC is a good idea, if you intend to keep paying the same amount.

[disneysteve]

I'd go with the HELOC. It is a lower rate and tax deductible, making the true rate even lower. Keep making the same $700/month payment and you'll be debt free even quicker and at a lower total cost.

[kork13]

Originally Posted by FrugalIII

What would you do? My wife and I divorced a little over a year ago. ... ... She pays for the portion of the insurance that covers her car.

I would get her car off my insurance as well. Do I read this correctly? Is her car still on your insurance? Again, not due to any financial necessity, but just to "get the monkey off", I would recommend you get her car removed from your insurance policy. You clearly want to cut the strings, so cut them all.

[GREENBACK]

I agree with the HELOC idea. I've purchased vehicles in the past using my HELOC because of the tax advantage and better interest rate.

[creditcardfree]

I would also get the HELOC if you can. I would want to sever all ties for legal purposes. Good luck!

[FrugalIII]

Yeah, it's more than just a financial decision for me. I want to have nothing left in joint names. She could not get insurance just in her name on a car that is in both names so it stayed on my policy as well. It's not that I can't afford to make the car payment, I just want to end this. The deal was that if she traded the car before it was paid off, she had to roll the balance of debt into her new car loan. That way I wouldn't have to pay off the balance of the loan myself and I've been holding off hoping she would get tired of the car and trade it. Now it seems obvious that she won't do that so I want to get this loan off my back.