Re: pay off car vs saving for house
Tigersmilk,
Do you know how much your car is worth? Are you very attached to it? Maybe you can get a better deal if you trade your car in, if you have good credit. Manufacturers often offer special deals at very low interest rates. Chrysler is currently offering zero percent financing:
http://www.forbes.com/reuters/feeds/...CORRECTED.html
Eight percent seems high to me for a car loan. If you can't or don't want to do that, I would recommend paying your car off as soon as reasonably possible, if there is no penalty. I doubt there is any risk-free investment where you are guaranteed eight percent after taxes.
Re: pay off car vs saving for house
You could also just try to refinance the portion of your car loan that is left at a lower rate and pay it off more quickly and then whatever extra money you have put into savings.
Re: pay off car vs saving for house
^^^ with the 'capital shortage' at many major US banks as a result of 'subprime' mortgage write-offs, this has trickled down to a shortage of cash available to major US banks to make new loans. Also, the delinquency rate on existing car loans has risen to the point of becoming worrysome to the lending banks. As such, where new applications for car loans are concerned, creditworthiness standards of the applicant are now being looked at with a fine tooth comb. Thus a person with less than pristine credit, and with an unpredictable, undocumentable income is going to have difficulty getting approved for an auto loan refi - and if they do get approved the interest rate is going to be shockingly high.
Keep in mind that the 'incentive financing' being made available by automakers to try and offset falling sales of new vehicles is NOT originating with the banking industry in general ... it is basically a price concession being given up by the automaker, with that price concession being made available either in the form of lump sum 'cash back' at the time of sale or in the form of subsidized interest rate on a car loan originated by a division of the automaker. In either case, it does not apply to sales of second-hand cars, nor to refinancing existing car loans.