[Mosaud1998]

I owe roughly $9500~ on the 540. I never had a loan until I brought the car. So, if I keep the loan open for the loan period (3 years), it'll help my credit.

Payments are $315~/month. I add $185~/month extra so I can pay the car off. My original plan was to pay the car off in 1.5 year but not 100% sure if I should pay the car off or just keep the loan open for 3 years to build my credit.

Interest is 1.9% so that's like $300~ extra at the end of the loan period.

I'm not really a fan of car payments. So, I kinda hate it

[Bonk!]

I would guess there are two schools of thought here. I, personally, hate debt so I would pay it off. However, that's such a low rate that some would argue you're better off taking that extra $185 a month and investing it, particularly since the market is in decline. This is probably a better long term strategy.

[Mosaud1998]

Originally Posted by Bonk!

I would guess there are two schools of thought here. I, personally, hate debt so I would pay it off. However, that's such a low rate that some would argue you're better off taking that extra $185 a month and investing it, particularly since the market is in decline. This is probably a better long term strategy.

I hate debt also. But I mean $315/month isn't alot. But I can pay the car off next year and be debt free

[tcphoto]

I would pay it off as scheduled and simply put it in the bank, pay off credit cards or invest it smartly. I find it easier to sleep at night when I don't have to worry about money.

[Mosaud1998]

Originally Posted by tcphoto

I would pay it off as scheduled and simply put it in the bank, pay off credit cards or invest it smartly. I find it easier to sleep at night when I don't have to worry about money.

Pay it off in 3 years($315/month or 1.5 year ($500/month).

I've got no other debt but the car as of right now.

[tcphoto]

I'd pay as scheduled and save the money or invest it in a safe stock, you'll more than make up for the interest paid on the note.

[Tommy-G]

My understanding is paying it off now or taking it to the full term of the loan wont matter regarding your credit as long as the loan is paid off and been on time. Meaning, I don't think the 1.5 years left will give you a better credit rating than paying it off now.

[Mosaud1998]

Originally Posted by Tommy-G

My understanding is paying it off now or taking it to the full term of the loan wont matter regarding your credit as long as the loan is paid off and been on time. Meaning, I don't think the 1.5 years left will give you a better credit rating than paying it off now.

My credit score is 760~. I've got light credit (credit card stuff). I put a good chunk of dough down at the time. Hence the low payments.

I'm 24 so I mean I could possibly get my score to an 800. I don't mind the $500/ month. But, I wouldn't mind keeping the $185 in my account. But, I also don't like monthly payments

[Mosaud1998]

Not paying the car off right now. Was going to pay it off next year. So, I'd owe like $5k-$6k~

[Manny01]

A few comments:

- 1.9% car note is dirt cheap. And being on the backend of that note you're probably paying $20 a month on interest, again dirt cheap.
-Sounds like you have no savings since the debate is whether to pay pay off in 1.5 years vs. 3 years.
-Combining the above two points, I would stop paying extra towards a dirt cheap note, don't worry about paying off the car early, and save every penny you can. Build yourself some savings, emergency fund, downpayment, investing money, etc.
-Don't worry about your credit. 750 is good, and debating whether to pay off early or not and the impact on your score is missing the forest for the trees.

[Mosaud1998]

Originally Posted by Manny01

A few comments:

- 1.9% car note is dirt cheap. And being on the backend of that note you're probably paying $20 a month on interest, again dirt cheap.
-Sounds like you have no savings since the debate is whether to pay pay off in 1.5 years vs. 3 years.
-Combining the above two points, I would stop paying extra towards a dirt cheap note, don't worry about paying off the car early, and save every penny you can. Build yourself some savings, emergency fund, downpayment, investing money, etc.
-Don't worry about your credit. 750 is good, and debating whether to pay off early or not and the impact on your score is missing the forest for the trees.

I've got a good chunk of money saved I didn't spend all my money on a car. That would be dumb.

I've got money in 401k, stocks and some in crypto.

[Manny01]

Originally Posted by Mosaud1998

I've got a good chunk of money saved I didn't spend all my money on a car. That would be dumb.

I've got money in 401k, stocks and some in crypto.

Then why are we debating 1.5 vs. 3 years on a 1.9% note? Missing the forest for the trees here. Save that money. 1.9% is dirt cheap money.

[Mosaud1998]

Originally Posted by Manny01

Then why are we debating 1.5 vs. 3 years on a 1.9% note? Missing the forest for the trees here. Save that money. 1.9% is dirt cheap money.

Not sure . I think I'll just keep the loan open for 3 years and keep that extra $185 in the bank

[XutvJet]

Originally Posted by Mosaud1998

I've got money in 401k, stocks and some in crypto.

Don't pay off early. Don't worry about your credit score.

In this order:

1) Are you carrying over credit card debt? If yes, then take that $185/mo and knock that debt out. Going forward, ALWAYS pay off your credit cards each month. Proceed to #2.

2) Do you have at least 3 months in expenses as a rainy day fund? If not, then take that $185 and contribute until you're at that number. Proceed to #3.

3) If you're not contributing to your 401K to the employer match, then take that $185/mo and do that. Proceed to #4.

4) If you are contributing to the match, then take that $185/mo and open a Roth IRA and do that NOW. This is the time to buy. Max your Roth. Proceed to #5.

5) Open a self-directed brokerage account.


Limit your Crypto (I'd say 10% or less of your portfolio). It's a very unstable investment with next to no protection. You'll be FAR better off in the long term sticking primarily to S&P index funds until you reach $1M.

[Mosaud1998]

Originally Posted by XutvJet

Don't pay off early. Don't worry about your credit score.

In this order:

1) Are you carrying over credit card debt? If yes, then take that $185/mo and knock that debt out. Going forward, ALWAYS pay off your credit cards each month. Proceed to #2.

2) Do you have at least 3 months in expenses as a rainy day fund? If not, then take that $185 and contribute until you're at that number. Proceed to #3.

3) If you're not contributing to your 401K to the employer match, then take that $185/mo and do that. Proceed to #4.

4) If you are contributing to the match, then take that $185/mo and open a Roth IRA and do that NOW. This is the time to buy. Max your Roth. Proceed to #5.

5) Open a self-directed brokerage account.


Limit your Crypto (I'd say 10% or less of your portfolio). It's a very unstable investment with next to no protection. You'll be FAR better off in the long term sticking primarily to S&P index funds until you reach $1M.

1) Are you carrying over credit card debt? If yes, then take that $185/mo and knock that debt out. Going forward, ALWAYS pay off your credit cards each month. Proceed to #2.

Nope, I pay the full balance on time

2) Do you have at least 3 months in expenses as a rainy day fund? If not, then take that $185 and contribute until you're at that number. Proceed to #3.

What's a rainy day fund? I've got a good amount of money in my checking. I haven't opened a savings yet.

3) If you're not contributing to your 401K to the employer match, then take that $185/mo and do that. Proceed to #4.

I have my 401k set for 5% taken from each paycheck to go to the 401k. 3% Is ROTH IRA, 2% is normal.

5) Open a self-directed brokerage account.

Stupid question, but how do I open that?

Limit your Crypto (I'd say 10% or less of your portfolio). It's a very unstable investment with next to no protection. You'll be FAR better off in the long term sticking primarily to S&P index funds until you reach $1M.

I don't have a lot in crypto. A few hundred . I've got a few thousand in stocks and stuff

[XutvJet]

Originally Posted by Mosaud1998

What's a rainy day fund? I've got a good amount of money in my checking. I haven't opened a savings yet.

Figure out all of your monthly "must have to get by" living expenses and then calculate by 3. That's how much money you need to have in a rainy day account in case you find yourself without a job, can't work because of an injury, or have some significant expense. Once your BMW is out of warranty, that rainy day account should be increased by $10K as serious repairs could massive on a late model out of warranty 540.

I have my 401k set for 5% taken from each paycheck to go to the 401k. 3% Is ROTH IRA, 2% is normal.

Does your employer match any of that? For example, if your employer matches 3% and you make $100k/yr and you put in 3% (i.e., $3K/year), they would match and contribute $3K to your 401K. If they don't contribute anything, then I wouldn't bother with the 401k and I'd move that money and open my own Roth IRA where you'll have way more investment funds, stocks, etc. to choose from.

Stupid question, but how do I open that?

Companies like Vanguard, Fidelity, and the like offer Roth IRAs, brokerage accounts, kids college accounts, etc. You are at the control of these accounts. If you want your money to really work for you, this is the way you do it. It's so damn easy and the earlier you start, the more money you'll have later on. It's a smart man's patience game.

[Mosaud1998]

Originally Posted by XutvJet

Companies like Vanguard, Fidelity, and the like offer Roth IRAs, brokerage accounts, kids college accounts, etc. You are at the control of these accounts. If you want your money to really work for you, this is the way you do it. It's so damn easy and the earlier you start, the more money you'll have later on. It's a smart man's patience game.

I'll have to look further into all this

[///MPhatic]

Originally Posted by Tommy-G

My understanding is paying it off now or taking it to the full term of the loan wont matter regarding your credit as long as the loan is paid off and been on time. Meaning, I don't think the 1.5 years left will give you a better credit rating than paying it off now.

That's not accurate. Your credit score shows how many months you've paid on a loan, and the more months paid on time, the better the score. It's also good for your credit to have open loans (as long as your debt to income is good).

I'm not saying it'd make a huge difference to leave the car on there because there are several other factors that go into having great credit (DTI/HC/etc), but technically his FICO will hold higher for longer if the loan exists for more months.

I'm a pay-it-off guy though, so I'd pay it off.

[Mosaud1998]

Originally Posted by ///MPhatic

That's not accurate. Your credit score shows how many months you've paid on a loan, and the more months paid on time, the better the score. It's also good for your credit to have open loans (as long as your debt to income is good).

I'm not saying it'd make a huge difference to leave the car on there because there are several other factors that go into having great credit (DTI/HC/etc), but technically his FICO will hold higher for longer if the loan exists for more months.

I'm a pay-it-off guy though, so I'd pay it off.

I am a payoff guy too. But, I have light credit.

[ToddBlack88]

I have never understood the “credit score” thing, or why I need it? I’m damn near 50 and have never been asked for anything related to it, nor ever been declined money.

I am Canadian so not sure if it’s any different.

Please explain what and why…..

[Mosaud1998]

Originally Posted by ToddBlack88

I have never understood the “credit score” thing, or why I need it? I’m damn near 50 and have never been asked for anything related to it, nor ever been declined money.

I am Canadian so not sure if it’s any different.

Please explain what and why…..

Good credit can be the make-or-break detail that determines whether you get a mortgage, car loan, or student loan. Bad credit, on the other hand, will make it difficult to get a credit card with a low-interest rate and more expensive to borrow money for any purpose.

[FuturPhil]

Originally Posted by tcphoto

I'd pay as scheduled and save the money or invest it in a safe stock, you'll more than make up for the interest paid on the note.

I totally agree. With such a low interest rate and the fact that the payment is pretty much nothing to begin with. I would keep the loan and use your money elsewhere such as investments (stocks, bonds, real estate). And as you said, you will also be helping your credit score potentially.

Debt is good, in fact its one of the best products out there if used correctly so debt shouldn't be viewed as a bad thing. Go ask any rich man/woman and most probably leverage debt or used it to get rich.