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Grappling with whether or not to pay off an auto loan that has a very low interest rate (1.75%). Balance is relatively small, around $11K, so the payments are modest at $275/mo. We have a good size emergency fund and are trying to build it up a bit more after having purchased a house this past year. Other finances are good, no other debts at all other than our mortgage (3.75%/30 year), we own our other vehicle outright. Will be receiving my annual bonus this year and it will be north of $20K. Would you pay off your auto loan to be done with it or would you put the money to work elsewhere since it's such a low interest rate?
I am a very unsophisticated guy and love to keep things as simple as possible. I never consider car loans or really any non real estate loans. If it is painful for me to write a check for a 20K car then I shouldnt be buying a 20K car.
When I take borrowing money out of the equation I purchase items well within my means.
You must be pretty sophisticated if you're writing checks to buy houses for cash unless you live in a trailer home.
Interesting. Can you take out a loan on a paid-off car, or can you only use these if you already owe money on the car
Their rates are higher than my current rate, but if I was doing a refi I'd seriously consider them. As far as I can tell, they will only finance either the remaining balance of a not paid off car or up to about 120% the 'current value' of the car (NADA or whatever) for a paid off car, and it has to be a 2012 or newer to refinance. The rates are also variable, and these assume a 700+ credit rating, which is not that high. No refi fees either.
Other than that, thanks for the recommendation Ncole!
Last edited by TheOverdog; 01-27-2017 at 02:20 PM..
You must be pretty sophisticated if you're writing checks to buy houses for cash unless you live in a trailer home.
I wrote..."non real estate loans"
I just read a lot of books...and I choose to keep things as simple and clean as possible. It may cost me some opportunity costs but it gives me great peace of mind.
Because cash is king. Worrying about 2% on this sum of money is ridiculous.
"Cash is king" is one of the most abusable phrases in the English language. Some people use it to argue in FAVOR of buying cars in cash, others (like you) use it in the exact opposite way. Wow!
I see no reason that "worrying" about 2% is a bad thing. I guess you'd be saying nothing if I threw a couple $100 bills out the window while cruisin' along Baltimore Avenue, since it is "such a small sum"....
"Cash is king" is one of the most abusable phrases in the English language. Some people use it to argue in FAVOR of buying cars in cash, others (like you) use it in the exact opposite way. Wow!
I see no reason that "worrying" about 2% is a bad thing. I guess you'd be saying nothing if I threw a couple $100 bills out the window while cruisin' along Baltimore Avenue, since it is "such a small sum"....
cash is liquid while our car isnt. once you pay off that loan, that 11k is no longer easily accessible to you.
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