How To Pay Off 7-year $34,000 Car Loan... IN ONE YEAR!
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- Опубликовано: 1 окт 2024
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🚀 Are you ready to turbocharge your financial freedom journey? In this video, we'll uncover How To Pay Off 7-year $34,000 Car Loan... IN ONE YEAR!💥
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Great Job explaining Velocity Banking with a variety of scenario's 👍👍👍 CJ!!
Adding this one to my Auto loan payoff play list Thank you Sir.
So...... what happened to the 21% INTEREST on the line of credit? Because the math ain't mathing. It will take LONGER than 5 months to replenish the 10k at 2k a month if you include the INTEREST. 😮
@@BigBrotherMotown it's what I'm trying understand. He makes it seem as the Line of credit doesn't have any interest unless I'm missing something.
@mychann33 exactly. That would only make sense if you were going to pay the full amount of the credit line before the interest applies. It also doesn't make sense to replace one interest rate with a HIGHER one.
I@mychann33 if you drop your income into, there won't be any interest.
You guys don't listen. Interest is not equal. Interest is not created the same. Amortized Interest is what's on any standard loan. Car loans included, but credit cards and Lines of credit have simple interest.
Your average daily balance is an example of simple interest. It takes time to become a problem. Amortized interest is pre loaded and pre calculated interest you have no control over.
@@fatalgod1231 Please tell the time stamp where the interest is accounted for or mentioned. Each example does not account for interest in the LOC.
If have a loc balance of 10k and pay 2k per month ... it will not be paid in five months.
This is BS! You still have to pay your Line of Credit! You’re robbing Peter to pay Paul!
You're paying the line with your income/pay check. We're treating the line like a checking account.
Hey if you don't mind me asking, wouldn't there still be a balance with interest because if you take out $10,000 and then put your whole paycheck in the line of credit as a checking account that doesn't equal the $10,000. If your paycheck is $5000 then there would still be $5000 left on the line of credit with 21% interest being applied. Seems you still pay interest since your paycheck doesn't equal the credit line amount. What am I missing? 😊
@@septemberanne4176 Yes the line does still have a balance. The difference is the average person lets the 10K sit on the line, so they pay interest on the average daily balance of 10K. Which would be 172.60 in interest owed. So month one would be at 8,172.60. Parking income in the line, income being 5,000, it lowers the average daily balance to 7,500. So monthly interest would be 129.45. So on month 1 of VB you would be at 8,129.45. So the difference between just making extra payment and VB is 43.15. If you can gain 40 bucks a month that's 480 in interest saved, just on the line. This doesn't include the amount of interest saved chunking at loans. Hope this answered your question.
😢 I’m confused
It can be confusing at first. You have to keep watching and go back and watch older videos. It will click eventually.
Also, writing it down helps a lot. Keep it simple and use this example. Major numbers are
Income-5k
Expenses-3k
Debt-32k
Cashflow-2k
Line of Credit-10k
Remember you put all your income into the line of credit. You will also have a checking account with the same bank. You transfer money from the line into your checking to pay bills. The 2k in cashflow stays in the line to pay it off.
Month1. 10k goes to the principal of the car. Now your line has a 10k balance. Your 5k of income goes in the line. Now it goes down to 5k. Then your expenses of 3k comes out of your line and you transfer it into your checking to pay bills. ****The car payment is part of that 3k and not in addition to it. This is important to note.****
Month 2. The line balance goes back up to 8k. Same thing. 5k income in. Balance goes down to 3k and 3k comes out to pay expenses. Line balance is now 6k.
Month 3 repeat. 5k goes in, line balance goes down to 1k and expenses of 3k goes out to your checking to pay bills. Line balance back up to 4k.
Month 4 is a little different. Your line balance is only 4k and your income for the month is 5k. You pay off the line and you will have 1k sitting in your checking. 3k will come out your line to pay bills and the balance will be 3k and then you transfer that 1k in your checking to your line which will lower the balance to 2k.
**** It may be tempting to pay your bills with that 1k sitting in you checking but don't do it. Have all your expenses flow from your line of credit and don't mess up the flow. Keep it consistent.*****
Month 5. This is your complete payoff month since your Cashflow is 2k and you have a 2k balance left on the line. Repeat what you did in the previous month 4.
Month 6...your line is free again with 10k and you repeat the same process and put another 10k on the principal of the car loan.
Write it down and do the math. It helps a lot trust me. Just remember the flow of the money.
Take money from the line and put it towards the principal of the car. Put all your income into the line. Then transfer your expenses out of the line in your checking to pay bills. Rince and repeat.
Basically divide what you owe by your Cashflow to see how long it will take you to pay off the chunk you made. In this case it is 10k/2k=5. Simple math.
It's confusing at first, but I am sure if you rewatch it a few times, you'll see the trick
If you can afford to pay $2000 a month on the line of credit why not just pay that directly to the car payment each month? $2540 a month car payment wld do the same thing maybe even faster....@@raybaez8676
@@raybaez8676 Yes. The trick being: if you don't know what you are doing you are willing to buy a bottle of snake oil.
I have so many questions about this. My car loan is the thorn on my side that I need to get rid of as soon as possible.
this is only if you have cash flow you need at lease 2000 a month cash flow
Yeah, but where does the li ne of credit come from? And then how do you pay off the line of credit if you're paying off the car?
thank you for the response I be wondering I only owe like $43135.67 on my mortgage, I have a 10k line of credit I am paying off some bills right now and should be done in August once I am done in August I wonder if it worth me doing this with my mortgage due to the fact I don’t pay interest for my mortgage before anyone jumps I own a habitat home for 14 years and I owe 10 more years I want to be done sooner than 10 years anyone has an idea
I believe watching this video may have explained it to you
The supposition of this “plan” is you have $2000 of leftover income that you have no need of, so you can apply it all towards your car loan. Not many people are going to forgo having a life, nor not have any unexpected expenses. Who can really live on $3000 months? Maybe somewhere in the middle of the country, in a small town. So you probably need to work remotely. This is not reasonable plan for most people.
Yeah if you can’t afford the method then most likely can’t afford the car.
If you have less cash flow it will of course take longer to accomplish but still MUCH faster than the original loan AND save you money on interest.
lol your reading into it too much you can take smaller amounts it works 100%
But the line of credit is gaining interest 🤷🏽♂️
True but it's much less interest accrued because it's simple interest instead of amortized debt like that of the auto loan.
@@online247365 Uhhh, no. Not when we're comparing 21% interest rate to a 10% one. It's true that the 21% is against average daily balance for the month, but that's not enough of a benefit to put them on equal footing.
You're fulfilling the LOC in 5 months so the APR is substantially lower!
@@rhynoprotection put you can just pay the principal directly without any interest.
"Give a Man a Fish, and You Feed Him for a Day. Teach a Man To Fish, and You Feed Him for a Lifetime". The problem with these kinds of videos is they are giving out fish, not teaching people to fish.
You don't need a line of credit to accelerate the car loan if you have $2000/month in positive cashflow after your current 540/month car payment and other expenses. Just instead pay $2,540 per month toward your car loan. The loan will be paid off in 14 months, and without incurring any LOC interest charges @21%.
It's not mathematically possible to get ahead by shifting 10% debt to 21% debt.
I am understanding this but it seems as if you missed to pay the 22,727 for the next six months then pay the last 10800 for another six month seems like this would be paid in a year and half or am I am not understanding how this was paid
Yes it can seem confusing. Nothing was missed. But your timeline is pretty close.
Day 1, 10k towards principal and balance down to 22k. In month 6 your line is clear again. Now another 10k chunk towards the principal. Now it's down to 10k. Another 5 months go by and now your line is free again the beginning of month 6 which is the one year mark.
******It is important to note that monthly car payments are still getting paid every month. So multiply 5 x $348 and then 6 x $496. This is an addition to your line of credit chunks.******
So we are talking about and additional $4700 and some change off the principal within those 12 months.
So now we are at month 12 and you make your last chunk. The last chunk probably will be less than 10k but let's just say 10k because life happens. Car is paid off.
So technically, the car will be paid off in a year but you you still have to pay off the line of credit from the last chunk of 10k.
So this is correct. So after a year your car is paid off and your Cashflow will rise to $2540. It will take around 4 months to pay the line off and now you are free and clear to invest in assets.
I hope this makes it more clear to you. Have a great day!!
@@aliltussin3509 thank you for the response I be wondering I only owe like $43135.67 on my mortgage, I have a 10k line of credit I am paying off some bills right now and should be done in August once I am done in August I wonder if it worth me doing this with my mortgage due to the fact I don’t pay interest for my mortgage before anyone jumps I own a habitat home for 14 years and I owe 10 more years I want to be done sooner than 10 years anyone has an idea
@@aliltussin3509Awesome and thanks!
Wouldn't just paying the 2k per directly on the car loan every month by better.... verses waiting 5 months be better? If not explain how wouldn't it.
Of course. But keeping people confused, not educating people, is how velocity banking works. And it only works for the people who are selling it, so....
What he is not saying is what you have observed: an even better option is just paying the extra 2K you have each month directly toward the car loan. No LOC required and loan paid off in 14 months.
correct me if I'm wrong, but I believe using the Line of Credit helps make those large chunk payments to the loan, cutting into the interest faster. Just making the extra 2000.00 per month will work but cutting into the interest up front is the key to speed up the process no?
@@majesticw7668 No, because you have just traded a 10k 10% debt for a 10k 21% debt.
@@Larry821😂
😮shit it works, however what credit company allows you to do that now.
Credit unions generally offer personal lines of credit (PLOC)
Navy Federal.
Amen. Navy Federal
Great job!!! I get
So… what happens if you don’t have cash flow?
Honda is offering 3.9% financing on purchase of new vehicles.
Has he answered questions ??
Buy with cash? 🕶
There are so many missing parts to this.
U PAY 940 A MONTH FOR A YEAR
Are you taking the line of credit and paying 10k on the principal and paying to 540 from the regular paycheck or are you paying 540 a month from the line of credit and putting the 10k towards the principal n put 2k towards the line
Sylvia, Im not 100% sure but as I understand it, your putting your entire paycheck on the line of credit. Then you pay all your bills from the line of credit. Whatever money is left over after all your monthly expenses is what will be paying down your line of credit. So in this video they have 2000 left after all monthly spending. So 2000 cash flow. If you only have 500 left after all your bills and miscellaneous expenses then your cash flow is 500 a month.
Are you taking the line of credit and paying 10k on the principal and paying to 540 from the regular paycheck or are you paying 540 a month from the line of credit and putting the 10k towards the principal n put 2k towards the line
If you have a personal line of credit, all your income goes into the line. You then take your car payment out of the line and transfer it into your checking account to pay your car loan.
Your personal line of credit becomes your new checking account. All your income goes in and you transfer your expenses out into your checking account to pay bills. Cashflow stays in the line of credit.
In this example, your Cashflow is 2k and that stays in the line to pay it down every single month.
I hope this makes sense.
@@aliltussin3509absolutely and thank you so very much!
I really enjoy your videos and your positivity
So borrow money at double the interest rate of the other loan to be in a better situation? That doesn’t even make sense. The way you are explaining this you’re assuming the line of credit is 0% not 21%. If it was 0 than yeah it works but this is terrible financial advice.
the loans are different, study up on it
@@johnleebasswant to enlighten me?
@@dre5229 you obviously didn't pay attention to his video or can't dive deeper on your own so I'm not going to type a long explanation here to try and convince you, help you understand, when you can do it with all the YT vids on this
@@johnleebass I did pay attention sounds like you don’t understand anything if you can’t explain a simple concept.
Also, I’ll enlighten you. If you create a few amortization schedules to test this theory you would see all this does is create an illusion in your mind that it pays off debt faster but in reality if you took all that extra money your are paying on the higher interest loan you are creating and apply those funds to the original lower interest loan it saves slightly more money because you are not replacing portion of the lower interest debt with the higher interest debt and rapidly paying it off that more expense debt.
This requires a 100 thousand yearly income to accommodate only one car payment, not including mortgage. This implies that you would not be buying food in this economy, only gas mortgage, water, light. Not taking in consideration kids, and or home maintenance. For people that have an income of 30,000 this does not work, not even for an income of 60,000 a year. Unless you have paid off your house. Where only people that do not pay mortgage are sons or daughters that still live under parents home
So you mean to tell me that your CC is going to give you a $10K cash advance at only 21% APR? Even if they do, I’m not sure they would allow you to take the full $10k LOC as a cash advance. Am I wrong?
You can do this with a credit card if you have good credit and are in good standing. It would be more difficult to do again and again but you could easily perform this method with a personal line of credit from your credit union and the interest rate would be much lower than 21%
@@benspurgeon6273 maybe, but even better to pay cash for the ride and invest that $2k/ month OR at least encourage the listener to consider investing the $2k + $540 payment after the car is paid off. Good strategy though. 👍🏾
I would never take out a cash advance and my bank only allows 500 a day only if you have the cash for it a day that means atm fees and interest and 5% or 10$ whichever is great if you go to the bank could have fees and is the same and might not give you 10k I wouldn’t do that
@@sylviaz4951 not at all you apply for a personal line of credit it is a revolving credit line. There are no fees involved with using it. It works very similarly to a credit card.
It’s a line of credit (LOC) that’s a revolving credit. Works like a credit card but uses a daily simple interest instead of an APR. You still need to be somewhat aware of your budget. Otherwise, you risk maxing out the LOC like a credit card and go further into debt. This method is better than Dave Ramsey’s method if you are semi-financially disciplined.
If you get a loan at 21% interest lol 🤣 you shouldn’t be buying a car.
It's an unsecured (meaning you're not posting collateral) revolving (use it like a credit card) line of credit... It's a much riskier way to lend money for the bank than a car loan or mortgage because those can be repossessed or foreclosed upon. The L.O.C. requires no collateral so it's riskier and that's reflected in the interest rate.
Amen
Who has a 7 year loan for $37k for a car
I did a 8 year car loan 😅
I did a 6 year and they offer also 84 months without blinking an eye.
@@jayceerenegado8038Thanks
@@DrFinancialLiteracy yes, but wouldn't that tell you it's for their benefit not yours.