So I just bought a car for 40k, 15k down and at an interest of 1.9% over 60 months. So 25k over 5 years at 1.9%. My insurance is ~420 but can possibly get it down to 380 if I get a sensor put in the car that tracks speed. I’m 27 and I make ~67.6k take home after tax and everything a year. Currently living at home with no debt or rent. Was wondering if it’s smarter to invest the money and pay the minimum bc the interest is so low or just pay it off fast.
I was wondering if I should pay my car loan fast or just pay the minimum
byu/nurseboi357 inpersonalfinance
Posted by nurseboi357
7 Comments
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
debt or invest: https://www.bogleheads.org/wiki/Paying_down_loans_versus_investing https://reddit.com/r/personalfinance/comments/16jcmnh/_/k0qox0x/?context=1 https://reddit.com/r/personalfinance/comments/zssug0/_/j1ddljd/?context=1
Pay the minimum, max out your Roth.
At 1.9% let it go to term. A basic HYSA will be doubling that rate, you don’t even have to invest to clear the rate.
at 1.9% i would just pay the minimums
1.9% is very low interest, mathematically the best thing to do is to pay it off as slowly as they will let you. You will earn more in interest on extra money (even in a HYSA right now) than the loan costs.
You would be leaving money on the table if you pay off the car.
Put the excess cash in a HYSA that gets at least 3.5% instead.
I’m the type to over pay by like $20-40 bucks since I don’t like debt and can knock a few months off the term of loan but yeah that’s a great rate so be sure everything else can get maxed.