Personal Finance

Scotia Auto Open loan

  • Last Updated:
  • Apr 29th, 2014 2:59 pm
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[OP]
Jr. Member
Jan 2, 2009
139 posts
34 upvotes
Ontario

Scotia Auto Open loan

I've a 5 years 5.9% open loan with Scotia through Mitsubishi Dealership for a used 2009 Mitsubishi Outlander. When I got this loan, I was told that i can pay it off any time. I'm in my third year right now on a bi-weekly payment plan, and thinking about paying off the remaining loan in one lump sum payment through balance transfer or cash payment. I have an old credit card with 3.9% AIR for both purchases and balance transfer (zero transfer fee) that has zero balance. Now my question is:
1. Do I still have to pay the interest on my remaining principal amount if I pay it, let's say tomorrow?
2. If the bank still charges 5.9% on the remaining principal, does it make sense financially to transfer to my credit card with lower interest rate?

I'd appreciate if you could give some input on my conundrum.
Thanks
2 replies
Member
User avatar
Mar 2, 2010
428 posts
37 upvotes
woesermarley wrote:
Apr 29th, 2014 2:31 pm
I've a 5 years 5.9% open loan with Scotia through Mitsubishi Dealership for a used 2009 Mitsubishi Outlander. When I got this loan, I was told that i can pay it off any time. I'm in my third year right now on a bi-weekly payment plan, and thinking about paying off the remaining loan in one lump sum payment through balance transfer or cash payment. I have an old credit card with 3.9% AIR for both purchases and balance transfer (zero transfer fee) that has zero balance. Now my question is:
1. Do I still have to pay the interest on my remaining principal amount if I pay it, let's say tomorrow?
2. If the bank still charges 5.9% on the remaining principal, does it make sense financially to transfer to my credit card with lower interest rate?

I'd appreciate if you could give some input on my conundrum.
Thanks
You will not be charged 5.9% interest for the remaining balance of the car loan. So if you can borrow money at 3.9%, then use that and save yourself some interest.
Just make sure interest rate on the card is not introductory. Last thing you want is for that rate to become 19%+.

Also, borrowing from credit card at lower rate does not mean that you should take another 3-4 years to pay off the card (i.e. don't decrease the payment amounts to your credit card).
As long as you make the same payments (same frequency and amount) to the credit card as you have been making to Scotia, you would be ahead.
[OP]
Jr. Member
Jan 2, 2009
139 posts
34 upvotes
Ontario
Thanks for the prompt reply. My card interest rate is variable (Prime plus 0.9%). It's been 3.9% for the last two years, and I doubt the prime is going to increase much in the next 2 years that i planned to pay it off completely.

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