Being the primary bread-winner with an unstable job, I think it would be a very bad idea to wipe out your savings. That’s a huge risk. I agree with RobY that if you had a stable job it would be okay to pay off most of the truck loan, but right now, in my humble opinion, having a finanical safety net is more important.

The low interest rate should not be a factor in how you handle this loan.

I too don’t like family loans just because those relationships are so important and money disagreements can easily destroy them.

However, I also would hate to see you rent for so long. I’m assuming 5-7 years to pay off the loan and then you have to save for a down payment.

If your family is ok with a 15 year payoff then I would set that schedule up and make that at a minimum EVERY month. Let that be the standard expectation which you can exceed (see below).

I would then live well below my means and aggressively build up savings for a downpayment on a home.

Then periodically (maybe once a year) I would take a portion of that years savings and make a bonus payment on the loan. Lets say you saved $10,000 this year then pay your family $5,000 extra. That will go a long way to showing them that you are not only meeting your obligations but are exceeding them. Also, let them know you are saving for the downpayment.

As long as you are spending wisely (living below your means) then I think the family loan will be fine. You may even find that they encourage you to not make extra payments in liu of saving for the down payment. Let the relationship guide your decisions at that point instead of the interest rate.

Never ever allow the family member to feel like they are being taken advantage of. They are rewarded with a feeling pride when they can help you and they know it was appreciated and respected.

I would absolutely NOT pay off the truck if you are the main bread winner with an unstable job. If you lose your job then you are going to have a serious cash flow problem and will not be able to borrow money. That cash flow problem could force you into a firesale situtation that will do more damage.

I don’t know how much money you need to live for 6 months without a job but it will be much more than a starter emergency fund.

If you are really worried about your job and want to be proactive then replacing the truck with a more affordable choice is a good suggestion.

If it makes sense to you to keep the truck now … then if you lose your job later you can bite the bullet and downgrade the truck at that time. You will have the savings to avoid the cash flow problems.

BTW, if you had a stable job then I would have suggested paying most of the truck loan off.

The most important thing is for you to stay focused and make smart decisions (instead of luxury purchases) during this time.

Good luck :)

Now it was and is their decision to give this to you, and I assume they are not clamoring for their money back. However if you make a good effort to pay them back as soon as you possibly can, it will forstall possible problems with them, or with your siblings, in the future.

Think about it. You go out and buy a new car for $25,000. Your parents think ‘Nice car I’m paying for.’ You go on a $10,000 vacation. Your brother thinks ‘I’d go on a vacation too if I borrowed $50,000 and didn’t have to pay it back anytime soon.’ This is a potentially very bad situation I’d advise to get out of ASAP.

Take it from one who learned the hard way, money has a way of changing a relationship, even between parent and son. Show them you value their money and give it back to them.

$1 to $2k can make a world of a difference if something pops up, and you’d want a cushion if you NEEDED to sell your truck so you wouldn’t have to sell it to the first person to give you an offer.

Plus, his wife would probably sleep better at night knowing there was an emergency cushion.

I’d say aim to have the truck paid for in six months.

Then, in six month’s time, you’ll be $2250 in regular payments closer to paying it off ($375 x 6) and you won’t have to completely exhaust your emergency savings.