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  1. #1
    former stim junkie mikebadg3's Avatar
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    Exclamation Pay off car loan or save money

    $4500 auto loan with 4.39% APR

    6000 savings


    ???
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    Manlet with Credentials Jasonw1178's Avatar
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    $6K sitting in savings is just losing value with inflation. 4.39% isn't bad. Pretty much a catch 22. Having your car paid off may lower your insurance. Boost your credit score because you paid off the loan and a lower DTI ratio. Depends on what you want to do. Having $6K liquid is a good thing to have.
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    Registered User Gringo12's Avatar
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    Pay off car loan with credit card
    Use savings to pay off credit card
    Have $4500 in credit available anytime you actually need it instead of having it tied up in a car getting charged 4.39%interest
    #free6ix9ine
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    Registered User DoragonKingu's Avatar
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    Use a Cash Back Credit Card or Rewards Credit Card pay off car with the card then pay off the credit card enjoy your rewards
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    Registered User savageoldman's Avatar
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    personally I would never have a loan on a depreciating asset

    but that's just me
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  6. #6
    former stim junkie mikebadg3's Avatar
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    Originally Posted by Jasonw1178 View Post
    $6K sitting in savings is just losing value with inflation. 4.39% isn't bad. Pretty much a catch 22. Having your car paid off may lower your insurance. Boost your credit score because you paid off the loan and a lower DTI ratio. Depends on what you want to do. Having $6K liquid is a good thing to have.
    i've been putting more into principal to the loan every month, and by april should have it paid off. At that rate i've been going, by the time i pay it off i'll have paid $200 interest total over one year.

    I want to make my money grow, and it won't in savings nor will it grow if i pay off the car.


    Originally Posted by savageoldman View Post
    personally I would never have a loan on a depreciating asset

    but that's just me
    care to explain why, as opposed to the common knowledge that a car is a depreciating asset


    -build credit
    -measly interest paid overall
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  7. #7
    Banned Spahgetti's Avatar
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    Pay it off.
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    Banned FrankCostanza's Avatar
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    Originally Posted by savageoldman View Post
    personally I would never have a loan on a depreciating asset

    but that's just me
    this unless it’s a sick interest rate.
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    Proud Dad 5x10's Avatar
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    Originally Posted by Spahgetti View Post
    Pay it off.
    this
    Then take the car payment and save/invest with it
    Index funds
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  10. #10
    Banned elterrible987's Avatar
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    Originally Posted by mikebadg3 View Post
    i've been putting more into principal to the loan every month, and by april should have it paid off. At that rate i've been going, by the time i pay it off i'll have paid $200 interest total over one year.

    I want to make my money grow, and it won't in savings nor will it grow if i pay off the car.


    care to explain why, as opposed to the common knowledge that a car is a depreciating asset


    -build credit
    -measly interest paid overall

    Oh if youre already going to pay it off by THIS April?

    I would just go with that and leave the 6k emergency fund intact.
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  11. #11
    Registered User Cartiac's Avatar
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    Originally Posted by mikebadg3 View Post
    i've been putting more into principal to the loan every month, and by april should have it paid off. At that rate i've been going, by the time i pay it off i'll have paid $200 interest total over one year.
    Keep doing this. Maintaining that balance between debt, cash flow and liquidity is likely the best for you right now considering you are asking this question.

    Start planning how to best utilize the increased cash flow when you pay off the loan. Figure out how much you want to keep in your savings for your emergency/splurge fund and start investing the rest.
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  12. #12
    Registered User Mercworx's Avatar
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    Pay off loan and save money faster with less debt.
    "Don't let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner"
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  13. #13
    Manlet with Credentials Jasonw1178's Avatar
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    Originally Posted by savageoldman View Post
    personally I would never have a loan on a depreciating asset

    but that's just me
    If you can, sure, but what if you can't? Not to argue, but there is another way of looking at it.

    Dave Ramsey's "drive around a beater while saving money" doesn't really make sense. So you buy some old used $2000 car, where you are dumping money into it just to keep it running and it's still a depreciating $2000 car. Something major goes out and now its scrap metal or you are going to pay another $2K+ in a car that is worth less than $2000. That's worse than interest to say the least. Not to even mention the time and hastle of dealing with a broken down car all of the time. What is that worth? How about the fact it's probably lacking safety and performance features which may save your life. What's that worth? Don't even give me chit about how you can find good cars cheap. You can't. You won't find anything decent for under $10K. Also, what is your happiness worth? I'd rather pay $2K in interest and have what I want than drive around some kind of chitbox, I pay almost $900/mo for my truck, and it's worth every damn penny.
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  14. #14
    Registered User savageoldman's Avatar
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    Originally Posted by mikebadg3 View Post
    i've been putting more into principal to the loan every month, and by april should have it paid off. At that rate i've been going, by the time i pay it off i'll have paid $200 interest total over one year.

    I want to make my money grow, and it won't in savings nor will it grow if i pay off the car.


    care to explain why, as opposed to the common knowledge that a car is a depreciating asset


    -build credit
    -measly interest paid overall
    because id save 5k and buy a japanese ****box that wont blow up
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  15. #15
    Lettuce be reality Bluestar92's Avatar
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    Originally Posted by Jasonw1178 View Post
    If you can, sure, but what if you can't? Not to argue, but there is another way of looking at it.

    Dave Ramsey's "drive around a beater while saving money" doesn't really make sense. So you buy some old used $2000 car, where you are dumping money into it just to keep it running and it's still a depreciating $2000 car. Something major goes out and now its scrap metal or you are going to pay another $2K+ in a car that is worth less than $2000. That's worse than interest to say the least. Not to even mention the time and hastle of dealing with a broken down car all of the time. What is that worth? How about the fact it's probably lacking safety and performance features which may save your life. What's that worth? Don't even give me chit about how you can find good cars cheap. You can't. You won't find anything decent for under $10K. Also, what is your happiness worth? I'd rather pay $2K in interest and have what I want than drive around some kind of chitbox, I pay almost $900/mo for my truck, and it's worth every damn penny.

    It makes plenty of sense. Most people are terrible at picking a reliable car and then don't keep up with maintenance. This strategy doesn't work for them. I paid way less than 10k in cash for my car when I was 16 and I've been driving it almost 12 years now. I've never had a car payment in my life. Also never spent more than $800 in a year on maintenance. Everything on my car works perfectly besides my AM radio. Now I have enough money that I could buy whatever I wanted in cash and I wouldn't be in that situation if I had a huge car payment.
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    Registered User Cartiac's Avatar
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    Originally Posted by savageoldman View Post
    personally I would never have a loan on a depreciating asset

    but that's just me
    Originally Posted by mikebadg3 View Post
    care to explain why, as opposed to the common knowledge that a car is a depreciating asset
    He is expressing a very financially conservative idea to not pay interest on something like a car because if you aren't taking advantage of the opportunity cost of the loan you spent extra money on something that has little value by the time you own it. While this is a good strategy for paycheck to paycheck type people it is actually the opposite for people managing/building wealth.

    It can be highly advantageous, especially when interest rates are very low and equities returns are very high, to spend as little of your own current capital on a depreciating asset. Why spend today's money on a depreciating asset when you can use someone else's current money for cheap while earning higher returns on that money than your are paying in interest and slowly pay off the loan with increasing inflated money.
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  17. #17
    Jelqbrah demfeelsbro's Avatar
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    Personally would leave that 6k in savings as emergency fund. Leave the car loan, and start investing whatever you have left over every month.
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    Originally Posted by Bluestar92 View Post
    It makes plenty of sense. Most people are terrible at picking a reliable car and then don't keep up with maintenance. This strategy doesn't work for them. I paid way less than 10k in cash for my car when I was 16 and I've been driving it almost 12 years now. I've never had a car payment in my life. Also never spent more than $800 in a year on maintenance. Everything on my car works perfectly besides my AM radio. Now I have enough money that I could buy whatever I wanted in cash and I wouldn't be in that situation if I had a huge car payment.
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