Now that I have a car loan -- what to do with it?

[mcsangel2]

I think it would be beneficial to raise your H's credit score, so keep the car loan for at least a couple of years. Pay off the SL's if you are able.

[niq]

What is the monthly payment? Does it pinch your monthly budget? If you paid it off, what would you do with the money?

I think the thing that maxes your credit rating is to pay it off over like a year or 18 months. Either with regular monthly payments or the minimum payment and then a lump sum at the end.

But really at that interest rate, if you just made the regular payment for five years I can't see being an MM scold. Okay sure if you put all the payment money into the S&P over that time, but we're you really going to do that? And if the answer is "yes", why not just do that with the cash savings you are considering using to pay it off now?


ETA and yes, SLs first.

[thefield]

There is absolutely no reason to pay this loan off any sooner than the 5 year term.

[Deleted]

If you want the installment loan on his credit history, I'd probably break up the loan amount into 12ths or 24ths and pay that amount each month so you get the benefit of the added credit history and the loan out of the way in a short amount of time.
I'd probably do the same for the SLs if you want them gone.

[Deleted]

Mar 1, 2015 14:00:04 GMT -5 aspentosh said:

Mar 1, 2015 13:28:12 GMT -5 cajunmom said:

I'd just round up the payment each month to the nearest hundred. That way, it would be paid off some early and your H could gain a bit more credit history.

This is what we've always done. It's helped us pay off all our cars 1-2 years early on a 5 year loan.

This was our plan for DH's car... and the payment is $398.xx lol. So we round up to $450.

[Deleted]

Mar 1, 2015 14:43:55 GMT -5 tacosforlife said:

Mar 1, 2015 14:37:12 GMT -5 @gingerbb said:

We financed whatever we couldn't put on our cc when we bought our car. I think it's 1.9%. We are just making the $950/month payment. I see no reason to pay it down early.

the general consensus on the board is not to pay down a mortgage but invest instead, The same logic should apply.

Holy fuckballs. Does your car give you a handjob every time you drive it?

The comparison to a mortgage is not quite on point since a car is always a depreciating asset while a house is - at least theoretically - an appreciating asset.

HOWEVER, when someone has an interest rate as low as v does, I would apply the same logic and would not pay it off early. In this case, I wouldn't even worry too much about being underwater on the car because a) she didn't buy a terribly expensive car, and b) knowing what we know of their overall financial picture, they could pay off the loan in the future even if they were underwater.

. I don't remember extract details but it was around $35 or $40k and we financed it over 3 years.

I don't see what the appreciating vs depreciating asset has to do with it. If she took the $10k or whatever and invested it she should earn more than she would have by paying the car off early. The math still applies.

[v]

Mar 1, 2015 17:02:02 GMT -5 niq said:

What is the monthly payment? Does it pinch your monthly budget? If you paid it off, what would you do with the money?

I think the thing that maxes your credit rating is to pay it off over like a year or 18 months. Either with regular monthly payments or the minimum payment and then a lump sum at the end.

But really at that interest rate, if you just made the regular payment for five years I can't see being an MM scold. Okay sure if you put all the payment money into the S&P over that time, but we're you really going to do that? And if the answer is "yes", why not just do that with the cash savings you are considering using to pay it off now?


ETA and yes, SLs first.

Monthly payment is $260 or something like that -- not anything that will pinch except that I've never had a car payment before so it will annoy me.  Although I plan to set the payment up to be taken out of our Capital One 360 account, which is money we never touch and tend to forget about and really, we have a lot more money sitting in cash than I think we should so I'm happy that it will at least be earmarked for something.

I am thinking of putting $5000 in the market this week as a "I *am* putting at least some of the money right in the market" gesture.  We'd probably add more on a rolling basis?

[lishie]

With such a low interest rate, I wouldn't make paying it off a priority.

[patches31709]

Mar 1, 2015 13:28:12 GMT -5 cajunmom said:

I'd just round up the payment each month to the nearest hundred. That way, it would be paid off some early and your H could gain a bit more credit history.

This is exactly what we do. It takes months off the loan, but if something should happen, we can always resort back to the lower payments.

[SJ]

I wouldn't pay a single penny early.

Especially if you trust yourselves to have the discipline to invest the money (I trust you to do so). Set up an auto payment to your brokerage account for the amount of the car payment if you have to.

You can beat that rate by investing.