Depending on how busy the year is I try and review all of the interest rates on my loans/lines of credit every six months or so. Even if most people can’t afford to pay down an expensive car loan early it may still be possible to get a line of credit and transfer the balance to that. I have some good friends who did this and instantly cut the interest rate that they paid on the car from approximately 12% down to 5%, thus saving alot of money.

To me, credit and installment plans have helped to ruin our personal finances. People only focus on the monthly payment when deciding to make a purchase. Many will pay any price as long as they can get a manageable payment!

Thanks Matthew and Khaleef! Looking at just monthly payments is short sighted in many cases. I think if people examine total purchase price they would modify their spending habits.

That example of the car costing 50% more is a perfect illustration. Credit is useful for two reasons:

1. You need something now and don’t have enough money (typically useful for really big-money purchases like real estate, vehicles and vacations

2. You don’t want to carry around that much cash in your pocket for security reasons.

Either way, pay down as much as possible as quickly as possible…unless you really want to pay a higher price.

With the exception of my house, I always try to buy outright (and hopefully my next house I can buy outright!). Your post is a great reminder of why we need to always shop based on total purchase price. We all need to be aware of what interest we are paying. And since compound interest is the most powerful force in the universe (according to Einstein), I always try to earn it rather than pay it!

[...] Budgeting Cash Flow and Monthly Payments @ Couple [...]

When I bought my last car I told the dealer I was interested in the total cost of the car not the monthly payments. He was stunned and remained quiet for a few moments before telling me that no one had ever told him that before.

He was trying to sell me a more expensive brand new car with lower monthly payments, instead of the second hand car that cost less in total, but had slightly higher monthly payments.

I told him I did not care what the monthly payments were because I could find a way to make that..but I did care what the total cost of the car was!!!!!

[...] of focusing on the monthly payments, I should looked at the big picture. Besides the car loan, there were some additional expenses with [...]

[...] wrote a couple of weeks ago about looking at total purchase price instead of just looking at monthly payments. I was showing how not paying attention to your car [...]

[...] It doesn’t hurt to ask. If they won’t then you may want to consider if you’ll increase your potential earnings enough with [...]

[...] Save some serious cash for your car replacement fund [...]

[...] to which you may be entitled. Actually, claiming deductions is one of the simplest ways to save money, yet is so often overlooked due to lack of knowledge or [...]

[...] the earlier you start to save for later the more you will end up saving. What portion of your income as a couple will go into savings accounts, investments, individual retirement accounts(traditional or Roth)? [...]

[...] you’re likely limiting your freedom.  If you spend most of the money you make you might feel budget and freedom to buy what you want but you’re limiting your [...]

[...] the beginning of the month, which means it’s time to examine last month’s finances. It’s an especially fun one as 2010 ended – so many changes with our finances! [...]

[...] the same time, you don’t want to stress out if if your electronic gear breaks.If you’ve made a big purchase with a credit card, rest a bit easier.  Did you know that it’s common to extend your [...]

[...] name.  Of course, once you have this card, it’s important to either pay it off each month or pay at least the minimum payment by the due date.  If you are going to get a credit card, make sure that you use it wisely and also get one that [...]

[...] our strengths, weaknesses, passions and different outlooks on life. This especially is true when dealing with finances as we usually prioritise our expenses according to our needs. It is because of our different needs [...]

[...] my mind are:Finding the best deal on our next carKeeping car repairs reasonably pricedIn regards to finding our next car, Howard offers some great tips on buying used without getting a lemon. He shows readers how to [...]

[...] hand, I’m worried that some people will spend more on unnecessary items because they can afford the layaway payments. Then again, people are going to buy what they want, I’d rather they use layaway than get [...]

[...] Your Card a BreakWhen using your credit cards, don’t always use your card immediately after fully paying off the balance. If you have multiple credit cards, try to use each one every few months. You should also try to [...]

[...] November was a good month. I knew that even before I checked Mint. We  didn’t have any big expenses come up. Our cat his vet visit, but it was just for a check-up and his rabies shot. I think the 50/50 Challenge was also a factor. I wanted to try and cut back on some expenses. [...]

[...] regards to finding our next car, Howard offers some great tips on buying used without getting a lemon. He shows readers how to [...]

[...] to which you may be entitled. Actually, claiming deductions is one of the simplest ways to save money, yet is so often overlooked due to lack of knowledge or [...]

[...] name.  Of course, once you have this card, it’s important to either pay it off each month or pay at least the minimum payment by the due date.  If you are going to get a credit card, make sure that you use it wisely and also get one that [...]

[...] in college, live like a college student. To me that means being independent and  focusing on earning what you buy. Using student loans to frivolously enhance your college education isn’t a smart move. [...]

[...] our cue to keep an eye out on what we spend. Looking ahead, it seems like we’ll be more budget conscious over the next [...]

I did the same thing! Just negotiated price of a car for my mother. I asked to negotiate the price of the car instead of all the other things like payments, trade-in, financing, down payment. Very smart move!

[...] still going to try though, so maybe some financial good can come of out of this recent [...]