Long story short, I was rear ended at a red light and my car was totaled. Replaced the car with the exact same year, make, model, 20k less miles, used vehicle. Interest rate is 8%. Insurance paid me basically the exact amount I spent on buying the replacement. Surely I should just pay this off instead keeping a car loan for the next 6 years at 8%, right? If it helps, 26M, no kids, no other debt, retirement and emergency fund already set up regardless of if I pay this 30k loan off tomorrow. Thank you for any advice!
Validation Needed: Car Totaled and Able to Pay Off New Car, Should I?
byu/AlfalfaConsistent905 inpersonalfinance
Posted by AlfalfaConsistent905
5 Comments
Yes. Totaling it really isn’t even a factor — it would have made sense to pay it off before you totaled it too.
Pay it off, drive it as long as it is safe and maintainable.
But you know this already.
Sorry if I wasn’t clear earlier, the car I was driving was a car I already paid off. It’s a 2023 RAV4 hybrid, the previous had 46k miles and the new one I bought has 25k miles. The new car is the one with the loan that I can pay off. I think paying it off makes more sense than paying 8.5k in interest over the next 6 years. Just wanted to make sure I was right before shelling out 30k.
Pay it off. That interest rate and loan period are crazy to me. This is considered a high interest loan and needs to be aggressively paid off asap.
Pay it off. 3-4% is my border of keep the loan or pay it off . Paying it off is like having a ~10% guaranteed investment (even better than 8% since you don’t have to pay taxes on it)