Pay off car or not?

[dmc6469]

Not sure what I want to do. How stupid am I?? I sold my house in August and make great off the sale. Bought a new place and was able to put the 20% down. Bought new appliances for the place, new furniture, new home décor, went to WDW, going on a cruise in January, treated myself to nice things (Michael Kors purses – my weakness). Have a nice little cushion to fall back on. So in my ‘home account’ I have a good chunk. Part of me wants to pay off my car (6 year loan that I’ve had for 2 years) I would save $395/month plus all the interest. I want to do it but then I think “Ahh, that will take out half of what I have left and it’s SOOOO nice to see those funds” LOL So question, what would you do? Would you pay off the car and say “hey, I have a good amount left anyways” or just keep paying the monthly payment from a paycheck

 

[Maistre Gracey]

What's the interest rate on the car?

MG

 

[kj2mom]

Guessing that the interest rate you received on your home account is less than the interest rate you are paying for the car, I would pay off the car. Then, if you are disciplined enough (I am) I would continue to make those car payments but make them to yourself which would replenish those funds. I had a car loan I paid off last year (3 months early just by paying a little extra each month) and every month I would look at what I paid for interest and it would make me a little sad. My car loan was the only debt I had so it was kind of like wasting that $$ every month. Obviously it goes down every month but in the beginning I think my interest was as much as $50 a month. I would much rather save that $50 a month and see less of my funds than just give that money to the bank for no reason. Just my thoughts and I know people think differently and that is okay, different strokes for different folks as they say.

 

[lorijohnhill]

I was going to suggest the same thing. Pay it off and continue to make the payments to yourself.

 

[Nayan]

Pay off the car and make a little larger payment back to yourself. I plan on buying a new car at the end of the year and my payments would be around $200/month if I financed. I plan on paying cash and paying $275/month back to myself.

 

[jeepnjudy]

Guessing that the interest rate you received on your home account is less than the interest rate you are paying for the car, I would pay off the car. Then, if you are disciplined enough (I am) I would continue to make those car payments but make them to yourself which would replenish those funds. I had a car loan I paid off last year (3 months early just by paying a little extra each month) and every month I would look at what I paid for interest and it would make me a little sad. My car loan was the only debt I had so it was kind of like wasting that $$ every month. Obviously it goes down every month but in the beginning I think my interest was as much as $50 a month. I would much rather save that $50 a month and see less of my funds than just give that money to the bank for no reason. Just my thoughts and I know people think differently and that is okay, different strokes for different folks as they say.

Ditto...why pay the interest if you don't have to? Wasted money!

 

[amcnj]

My children each took out a car loan a little over a year ago now, but they were 0% financing, so no reason to rush and pay those off early!

 

[dmc6469]

What's the interest rate on the car?

MG

13%.

 

[dmc6469]

You guys all have a great idea about paying it off and then 'making payments' to myself. I might have to do that for sure. I just looked and last year alone I paid $2500 in interest. Ugh. Didn't know that.

 

[Jen4400]

13%.

That seems like a pretty high interest rate. I would pay it off and continue the payments to yourself...interest free!

 

[tvguy]

13%.

13% !? On a 6 year loan!? Without question, get that debt off the books today.

 

[WelshDH@98CPAlum]

My 6-year car loan is 2.49% and I would pay it off if I had the money and then continue to "make payments" to myself into a savings account.

Definitely pay it off..pull out the statement and see how much you are paying them - seriously. Write it down - and after you see that you paid them $,$$$ so far - and will pay $,$$$ in the next year in just Interest - you will realize - HEY - THATS MY MONEY!!!

 

[Nayan]

13%?!? Pay that sucker off now!!

 

[VillainFavs]

How on earth did you end up with a 13% 6-year car loan????? Mine, just bought in June, is less than 3%. I can't imagine having a loan for that much. And then I can't imagine not paying it off if you have the ability!

 

[SharonZ]

Are you sure that it's 13%?

 

[JenzyHP]

I'm pretty shocked it is 13%. Our current 6 year loan from June is 0%.

 

[Maistre Gracey]

13%.

Oh my..... pay the car off. Then, as a previous poster suggested, pay yourself back with the car payment money.

MG

 

[jsrowdon]

At 13% I would definitely say pay that off ASAP and pay yourself back with the money that would have gone to the car payment.

 

[kj2mom]

Isn't it scary when you look at the interest paid? I would definitely pay off the car and just make those car payments back to yourself. I know it looks good to see those numbers in the account but think how good it will be to know you are saving all of that interest!

 

[Gr8t Fan]

13%?!? Pay that sucker off now!!

+1 . If the rate truly is 13%, pay it off ASAP.