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Posted in Paying Your Bills
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DeeBJ

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Personal loan to pay off a car loan?
I currently owe about $5k on my car loan. I spoke with my CU about getting out of the loan which they informed me I cannot do, I have to finish paying in full. I'm thinking I would get a personal loan for $5k to pay off the car. I would be able to lower my insurance to No Fault instead of Full Coverage, which is about $400/mo. I know replacing debt with debt is not a good idea so I am open to any other suggestions.

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Generally, auto loans will have a much lower interest rate than personal loans. Auto loans are secured by the auto and personal loans are usually secured by nothing and that is why they have high rates. However, if you are paying $400 a month for insurance, in your case it may be cheaper to go the personal loan route. You will have to see what kind of rate you can get on a personal loan and do the math to see what works out. If it were me, the first thing I would do, is start looking for cheaper insurance, $400 a month is unheard of, at least to me. Spend an entire day, researching and calling insurance companies to find the best rate.

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