Should I pay off credit card or car loan?

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I have a car loan with 2 years left on it. 10,500 balance and payment of 480 per month. I believe the interest rate is 8.5%. Car is a 2005.

I have a credit card with 7800 on it, with interest rate of 13.5% I dont recall the minimum but I usually pay 400 a month, although I think the min is just over a 120 bucks.

Anyway, I have enough cash to pay off one of these debts. What is the better route to go?

Background, I can afford to keep paying the above amounts, but with mortgage, kids, etc, its becoming a pain. I just want a little more freedom, and am completely sick of car payments as I just last month finally paid off a 2005 Truck as well.

Thanks and take care,

I have had this loan from them for 4 years never had a problem. I always pay by the 1st until I notice online I have the freedom to make the payment anywhere from 1st to the 17th, after the 17th I would have to pay the fine. Well I had a credit card where the introductory rate of 1.99 expired and now that rate jumped to 19.99% I elected to use my paycheck on Oct to pay that off, otherwise it would be 40 interest, therefore I have intentions of paying the Mortgage tomorrow and even set it up that way.

Soon as Nov 1st past these SOB’s have been calling non stop, they have been calling my, wife’s and our teenage daughters cell phone. Mainly robo calls then here and there you get a smarty pants on the phone who says they work in collections and I am late. I tell them about the grace period but they argue with me very rude. They call at least 10x a day and all the way to 11PM.

Whenever I demand to speak to a manager they just simply disconnect.

Oh and over many times they ask If I want to apply for a government program. I have had it with them I am sure there is a government program to stop these calls, please advise.

  1. Reply
    February 3, 2011 at 6:47 am

    Pay off the credit cards first. Not only is it higher interest, but if you do get in a bind and need money you can charge on them.

    After you pay off the credit cards open a saving account and start put money in it each month.

  2. Reply
    February 3, 2011 at 7:01 am

    I’d pay off the credit card and tuck it away. Lesser interest of the 2 and it’ll be nice to have the “just in case” money if you ever need it.

  3. Reply
    February 3, 2011 at 7:27 am

    The credit card, because it has a higher interest rate and if you have some left over you can put it on the car.

  4. Reply
    February 3, 2011 at 7:52 am

    Since you have enough to pay of either, here’s my suggestion for the 10,500. Pay off the card at 7800 and put 2700 into a high-interest (if there is such a thing right now) savings account. This way if you run into an emergency you won’t have to turn to the credit card. Then use the monthly payment you would put toward the card on the car.

  5. Reply
    February 3, 2011 at 8:29 am

    Your mortgage payment is due on the first. It would be late on the second. Yes, you have a grace period before you have to pay a late fee, but that does not make your payment on time.

    With all the problems of people defaulting on mortgages, it sounds like your mortgage is set up to automatically start calling anyone who hasn’t paid by the first. They are being extremely proactive in preventing defaults … maybe a little too much so. It could be that since you always paid by the first in the past, the late payment this month sent up a red flag.

    The FDCPA regulates third party collection agencies. It does not apply to original creditors. And no, it is not harassment. Just pay the mortgage and the calls will stop. You probably will want to go back to paying by the first to avoid future hounding for the late payment.

  6. Reply
    Sharon T
    February 3, 2011 at 9:15 am

    Technically, your payment is late if you don’t pay by the 1st. The late charge doesn’t apply until later but be sure you get it paid a couple of days before that deadline.

    That said, this is unreasonable on the part of your mortgage company. I don’t think it is actionable as harassment but it sure is excessive.

    Call the toll-free customer service number and ask to speak to a supervisor. If you can send an e-mail to them, I’d do both. I might even follow up with a mailed letter extolling your displeasure in business-like, concise language.

  7. Reply
    February 3, 2011 at 9:59 am

    If I read your question correctly, you’re now behind 2 months on your mortgage. Yes, you are late, and they have every right to call whatever numbers are listed on your account. However, they are not allowed to call you after 9 p.m.. If you have “had it with them”, you may want to consider refinancing, but your recent activities may prevent you from doing that.

  8. Reply
    February 3, 2011 at 10:13 am

    No it’s not harassment, although it’s kind of surprising. Actually you’re late if you don’t pay by the first – a grace period just means they allow you to be 2 weeks late and don’t charge you a penalty.

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