Should i pay my car loan off early?

Discussion in 'Ways to Live Cheaper' started by MoneyFlux, Apr 18, 2014.

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  1. MoneyFlux

    MoneyFlux Newbie


    I bought a car last year and I still owe about $15,000 on it. My interest rate is 3.2%. I'm just wondering if it makes sense to pay the car off early or should I consider put my money into some other investment. I don't have any other debt. I pay my credit cards off every month and rent an apartment. I'm also trying to build credit, but my understanding is that since I've made over 12 payments that should no longer be a concern.
  2. Rayden87

    Rayden87 Newbie

    I would say no, and here's why. Your interest is low enough that you could probably find a safe investment that could earn over 4%. I think it would potentially cost you money to pay off your loan now. Plus, you need to make sure there are no early pay off penalties that could incur.

    Consider an IRA or an EFT with Vanguard.

    Not sure about the building credit part.
  3. Ronnie_P

    Ronnie_P Newbie

    Yeah, I don't think it affects your credit score anymore, but @Rayden87 is right, don't pay it off early.
  4. SueStanton

    SueStanton Newbie

    So basically the key is to look at the interest rate on the loan and decide if you can get a higher return by investing the money instead of paying it off? Interesting, I'm glad I stopped by then. Also 3.2% seems like a pretty good rate, but it's been a while since I filled our paperwork for a car loan. LOL.
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