Car Loan Payoff Question

[airportguy]

Greetings,

My wife and i have just paid off her student loan and we are ready to attack our auto loans. We used the debt snow ball to payoff our credit cards and student loan and found a ton of motivation and success using that method.

We now have two vehicles needing to be paid off.

2006 Toyota 4 Runner owe $10400 @ 9.5% interest 308 per month
2009 Honda Accord owe $15900 @ 19.0% interest at $396 per month.

We love the 4 Runner and hate the Accord (we are way underwater). Should we throw our debt payments at the Honda, sell it out right and then payoff the 4Runner??? The other option is to refinance the Honda at a lower interest rate and then payoff 4Runner in the debt snowball (Lowest Debts to largest)

Any ideas? Thanks!

[JustBill]

Welcome to the boards.

That loan on the Accord needs to go one way or the other. Look at penfed.org for refinance options, or sell it as you suggested. The rate on the 06 is high but not as critical, so if for whatever reason you can't refi or sell the Accord, I suggest applying all available funds on that loan to get it gone, irrespective of the snowball method.

Congrats on your success so far, and good luck with the remainder.

[thesimplemoneyblog]

Great progress on your debt paydown so far!

You might be limited in your options to refinance. It's likely that you can't refinance the whole amount of the Honda and would have to bring money to the table since you mentioned you are 'underwater.'

Otherwise, debt snowball sounds like it has been working for you all thus far, so keep up the good work with that method!

[JoeP]

No matter the advice given here, find out whatever made you sign a car loan for 19% and don't do that again!!!

[Bob B.]

Welcome.

When I was in deep debt trouble, it helped for me to see the numbers in black and white.

Based on the information you've given - you are paying about $145 per month toward principal, and about $250 per month toward interest on the Accord.

It will be another 20 months before your principal payments will exceed your interest payments.

Do whatever you need to do to get that loan paid down/get the car sold/get a lower interest rate.

The interest payments are killing you.

[TheKayla]

Wow, this is the second post I've seen here today with crazy car interest rates. If you can, I'd sell the car; at least re-finance. Both of them actually. Then pay down the principle fast, because like the previous posters are saying, that interest is killing you -- and with no return on investment, the cars are losing value every day.