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You had basically free money. For every extra dollar you put towards your car loan you saved 1%, but at the expense of not being able to put that dollar in a long-ish term investment where you could have reasonably gotten 8%.
The extra money I put towards the loan was insignificant next to the payment I was paying each month that wasnt going towards investing.
The extra money I put towards the loan was insignificant next to the payment I was paying each month that wasnt going towards investing.
Again, that money was basically free with such a low APR.
Say your initial loan was $25,000 at 36 months. At 0.9%, even if you had only made the regularly scheduled payments, you would have only payed a total of $330 in interest.
I don't know how many extra payments you made or when you made them in order to pay the car off early, but for fun, let's say that on the first month of your loan, you decide to add on an extra $300 every month. This means that at the end of the loan, you will have saved $97 in interest and will have paid the car off about a year early.
These total extra payments would total up to somewhere in the area of $6,000. If you had invested $6,000 for three years and gotten a reasonable 7% return, you would have made about $1,260.
So you passed on the opportunity to make $1,260 in order to save $97.
Again, that money was basically free with such a low APR.
Say your initial loan was $25,000 at 36 months. At 0.9%, even if you had only made the regularly scheduled payments, you would have only payed a total of $330 in interest.
I don't know how many extra payments you made or when you made them in order to pay the car off early, but for fun, let's say that on the first month of your loan, you decide to add on an extra $300 every month. This means that at the end of the loan, you will have saved $97 in interest and will have paid the car off about a year early.
These total extra payments would total up to somewhere in the area of $6,000. If you had invested $6,000 for three years and gotten a reasonable 7% return, you would have made about $1,260.
So you passed on the opportunity to make $1,260 in order to save $97.
I still dont see it that way. In carrying an auto loan, even at a low interest rate, there is risk involved, in case a job is lost. I would far rather have the car paid off as early as I can, then I can invest that money with no risk of losing the car, ever.
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My $00.02 of advice - is dependent on your age on how you set your priorities..
It is a fact there are less opportunities as one gets older.
Invest in yourself by paying off of your debt obligations as early is possible.
That way you are spending less in your life.
For example a 30 year mortgage, splitting one payment by 1/12th, adding that towards principle will knock off approximately 7.5 years off the term. Using that idea sending extra, paid off our mortgage in 14 years.
Living in an area with the most expensive electric rates. Our electric "budgeted" bill was $240, after installing solar panels (not leasing), now around $10 per month. After two years in the green for what we paid.
The most important propriety is your health, learn about reducing Oxidative Stress.
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Last edited by Modification Specialist; 03-24-2015 at 02:17 PM..
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