This year one of my financial goals has been to pay off my car. Sounds simple, right? Not so much.
To begin my story, let me preface by saying that I grew up in car dealerships. My mom and dad seemed to buy a new/used car every two years. Needless to say, I spent alot of times a kid a in a car dealer or waiting in the car for them to finalize a deal so we could drive home in a new van or car or truck.
Fast forward to my adulthood-I love the smell of new cars!!!!
The story pattern started in 1999 (I was 26), when I leased a Toyota Corolla. At this point in my young life I had already owned two cars. The Toyota Corolla was a great car, but leasing is a big no-no!!!!
Two years later-still in the middle of my lease-I decide I want to buy a new car.I turn in the Corolla (accepting penalties for turning in a lease early) and bought a used Toyota RAV-4. I got a horrible deal, rolled leasing fees from the previous car into the RAV-4 loan, and drove off happy!
Two years later the new car bug hit and I felt I needed to upgrade. I returned to the same dealer and this time bought a Toyota Highlander, rolling more money into my new car loan. Umm, can you say impulsive?
Here I am, then, five years into the loan, and as of January 2009 I still had $16K left on the loan. I started to snowball my debt (thanks to Dave Ramsey) and so far I have paid off $10K . . . in six months!
To save money on the loan, a couple months ago I was talking to a great friend who is my financial inspiration right now. I was considering refinancing my loan, not to lengthen the term but to lower my interest rate. My friend offered to pay off the loan amount, giving me a lower interest rate than the bank, thus helping her earn a bit of money AND saving me money in interest.
I pondered this idea for two months,and talked with a couple friends about the challenges of borrowing money from a friend. Would it ruin a friendship?
In the end I decided that my friendship with my financially savvy friend is strong enough to support a loan between friends. This week we went to the bank together and she paid off my car loan, essentially saving me a couple hundred dollars in interest by offering me a low interest rate. My goal is to pay off the loan in nine months so I can FINALLY be rid of this trail of car debt that has been weighing me down for too many years.
