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should I pay off my car loans?

saginus 234 32 April 24, 2016 at 10:05 AM
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I have one car loan at 2.39% (5 yr term, 3 yrs done) and second car loan just opened up (5yr term, 6 months done) at 1.99%.
Is it wise to pay it off or put the money into CD or lending club or mutual funds?

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#2
Might help if we knew how much was owed on the loans.
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#3
Pay it off if you can: interest is interest.

I'm not rich enough to pay any kind of interest beside mortgage that why I always pay cash or 0% interest.
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#4
There is a chance you will lose money by putting your money into investment accounts over the next few years instead of using it to pay off your car. For the same period of time, putting money into the CD allows you to take less inflation hit but will not make you rich with its pathetic return rate.

There is 100% chance that you will lose your car if you are behind car payments. I would pay it off immediately.

You can also ask yourself if you would get a personal loan at 1.99% and use it to do investment. If the answer is no, then you know what to do. People usually don't think about risks until something they don't usually do triggers the alarm inside them.

As matter of fact I would not buy any car if I can't afford to pay it in cash. I can't even justify myself buying new cars. The thought of the opportunity cost from the depreciation of a new car that only go down in value sitting on my drive way will not make me want a car bad enough to buy it new until I have enough amount of net worth that I can throw a very small portion away and wouldn't let it bother me (e.g. 1mil).

Here is a video showing why financing a car is a really bad idea for your future.
https://goo.gl/3UiRTX
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#5
Thanks but I already have bought the cars and I can pay if off if I can...most likely I think I will invest it in lending club as I already have it in 1%savings account and I am not earning a lot on that..
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#6
I bought Toyota and the loan APR was zero.
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#7
Absolutely
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#8
Quote from WuyiL View Post :
I bought Toyota and the loan APR was zero.

Well dealer deals seem to alternate between 2 scenarios, generally:

- Zero or near-zero interest rates
OR
- Higher interest rates but more $$ off the car upfront (e.g. lower sale price)

Generally though, you can refinance for 1-2% just about anytime, so when buying a car you should absolutely run the various amortization scenarios and figure out which way you will get a better deal. The last car I purchased - I waited for the following month's incentives to roll in which was like 4% APR but $3k off the car, then I immediately refinanced for 1.9% - so basically I got the best of both worlds. Watch out though, as T&C on the loan might prohibit early payoff (or a penalty).
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#9
Quote from Dr. J View Post :
Well dealer deals seem to alternate between 2 scenarios, generally:

- Zero or near-zero interest rates
OR
- Higher interest rates but more $$ off the car upfront (e.g. lower sale price)

Generally though, you can refinance for 1-2% just about anytime, so when buying a car you should absolutely run the various amortization scenarios and figure out which way you will get a better deal. The last car I purchased - I waited for the following month's incentives to roll in which was like 4% APR but $3k off the car, then I immediately refinanced for 1.9% - so basically I got the best of both worlds. Watch out though, as T&C on the loan might prohibit early payoff (or a penalty).
That's what I'm waiting for.
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for those that hate spelling mistakes www.walmarts.comCool

bulb save money by checking your insurance every 2 years (and not every 20)
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#10
Quote from stufine View Post :
That's what I'm waiting for.

That was a Honda Pilot FWIW, seemed pretty boiler plate language from Honda Financing. It explicitly said there is no penalty for prepayment.
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#11
Quote from Dr. J View Post :
Well dealer deals seem to alternate between 2 scenarios, generally:

- Zero or near-zero interest rates
OR
- Higher interest rates but more $$ off the car upfront (e.g. lower sale price)

Generally though, you can refinance for 1-2% just about anytime, so when buying a car you should absolutely run the various amortization scenarios and figure out which way you will get a better deal. The last car I purchased - I waited for the following month's incentives to roll in which was like 4% APR but $3k off the car, then I immediately refinanced for 1.9% - so basically I got the best of both worlds. Watch out though, as T&C on the loan might prohibit early payoff (or a penalty).
How did you get a new car rate (1.9%) loan on a technically used car?
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i hate every ape i see.. from chimpan-A to chimpan-Z. no you'll never make a monkey out of me. oh my god i was wrong..it was earth, all along.
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#12
Quote from TR0N View Post :
How did you get a new car rate (1.9%) loan on a technically used car?
https://www.penfed.org/refinance-auto-loan/
Rate valid for current (2016) and prior model year (2015).
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#13
I would invest the money instead, 1.99% is pretty low interest. You can easily beat that in the stock market, go with an ETF if you aren't willing to research individual stocks.
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#14
Common sense (which admittedly is not so common, esp. these days) dictates that if you can not get a guaranteed return > than the interest rate being paid, then it is better to pay it off if you can and be done with it. Maybe you can get better than those rates in some insured short term munis, but that is dodgy at best and you do not want anything long term in that area imo as rates have only one way to go.

Those who advocate going to Vegas (i.e., the stock market) are the same people that take a bath when the market goes into a correction or serious decline and then come out and say you will make your money back in the next 10-15 years\long term. You can try telling the repo people to wait the 10-15 years but somehow I do not think that will work lol.
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#15
Quote from YanksIn2009 View Post :
Common sense (which admittedly is not so common, esp. these days) dictates that if you can not get a guaranteed return > than the interest rate being paid, then it is better to pay it off if you can and be done with it. Maybe you can get better than those rates in some insured short term munis, but that is dodgy at best and you do not want anything long term in that area imo as rates have only one way to go.

Those who advocate going to Vegas (i.e., the stock market) are the same people that take a bath when the market goes into a correction or serious decline and then come out and say you will make your money back in the next 10-15 years\long term. You can try telling the repo people to wait the 10-15 years but somehow I do not think that will work lol.

Well, there is risk/reward. I'd say Vegas is essentially one extreme of "the stock market" - VERY high risk but also VERY high reward - stocks are relatively low risk and relatively low reward. One thing's for sure though, conventional bank savings routes (CD's, etc) don't even keep up with inflation, and even that 2% car loan is a steal or at least on par with inflation. Sure you shouldn't put all your eggs in one basket but to ignore general trends in stocks is foolish. After all, the S&P500 has averaged about 7% return when accounting for inflation and dividends, for the past 65 years or so.
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