Sell car and pay what?

[Summersunshinebliss]

Looking for some wisdom. We have just sold our car for the money in a plan to help pay off debt. We got £7k for our car sale. Would you use this money to pay off our other cars finance by doing so would stop outgoings of just over £500 per month or would you use the £7k to pay off other debt like credit cards.

There's no one answer to this as it depends on the interest and terms of the other debts.

There's loads of info online about the best way to structure paying off multiple different debts, I think Martin Lewis explains it well

You should pay off the most expensive debt first. So which ever loan or credit cards are costing you more.

Have a look on money saving expert for more advice.

Wasn't expecting quick advice thank you both. Will have a Google.

Dh wants to pay my car off which still has over a year of payments to go. I can see his logic as by paying my car off would provide us with a extra £500 per month. We would then use this to pay off other debt.

I am stuck between dh option or paying of £7k of other debt but then we would still have my monthly car payment of £500.

Most expensive debt first. If you just pay off your car and be £500 a month better off you will I suspect just spend it and not get out of debt.

You need to know the interest rates for each and if there are any penalties.
Calculate the total amount the debt will cost you before deciding which will save the most.

It’s quite likely that your car loan isnt your most expensive credit so definitely check. Plus it’s easier to keep up the discipline of paying a fixed term loan.

If not already on 0% can you transfer the credit card balances?

Credit cards often have very low repayments, and if you get them on 0%, unlikely to make sense to pay off first if you have other debt.

Ask for a settlement figure for the car and compare that with what you'd expect to pay by letting the car run to term. There's so many different ways to buy cars that no-one can advise without full details of the contract.

If you use an overdraft, first priority is to stop that, as its by far the most expensive mainstream type of credit.

Have you also reviewed your spending to reduce the cost of mobiles, broadband, subscriptions etc? Many people pay a lot more than they need to.

@Summersunshinebliss head on over to moneysavingexpert debt free wannabe thread for advice. Before you make a decision list all of your debts with interest rates. Any cards on 0% you also need the date when the 0% ends and the new interest rates. As others have said it makes sense to pay off debt with the highest interest rate first. Set the details up on a spreadsheet so you can track and watch the level go down.