I recently brought a new car and financed it through my Honda with an interest rate of 5.9% and monthly payments of about $400 a month for the next 5 years. My question is, is it better if i double my car payments to $800 dollars a month and pay it off in 2 and a half years instead of 5? And yes i can afford it.
2006-12-19 10:34:42 · 8 answers · asked by James C 1 in Business & Finance ➔ Credit
Any time you can pay something off early you should. Why give the company that fiananced any more than what you have to.
2006-12-19 11:15:27 · answer #1 · answered by Chillin-it 7 · 1⤊ 0⤋
I think it's great that you are considering paying off the car loan quckly and would never discourage someone from doing so. I'm in a similar situation..my rate is a little lower but not significantly lower. Rather than paying off my car loan, I opted to more aggressively fund my brokerage account and my retirement accounts. With my rate at 3.9% I felt comfortable that my investments both in my tax deferred accounts and my taxable brokerage account would on average return more than 3.9% per year after taxes. Recently it has proved to be the right decision as the broader equity markets are up around 15% year to date but that doesn't mean it will be that way in the future. If you are fairly risk averse, have adequate emergency savings in the bank, have no other higher rate consumer debt, are funding your retirmement accounts properly etc...then I would encourage you to pay it down aggressively. If you feel comfortable that the after tax return on other investment opportunites you have would be greater than 5.9% annually then you might forgo paying down the car loan in order to take advantage of those other opportunities. It sounds to me like you have a good handle on your finances and will make the right decision.
2006-12-19 19:16:56 · answer #2 · answered by SmittyJ 3 · 0⤊ 0⤋
I would. You will be saving interest each time. It will probably only take 2 year to pay off the car at that rate.
2006-12-19 20:51:48 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
If you can afford it then do it less interest that you will have to pay in the long run.By the time 5 years are up you will have paid for your car twice.
2006-12-19 18:43:33 · answer #4 · answered by Dagger 2 · 0⤊ 0⤋
yes if you deduct-the interest rate,on the payments that you made early..if you need the credit line to build your credit,then only pay one year ahead,,
2006-12-19 18:45:55 · answer #5 · answered by tysgrandma99 4 · 0⤊ 0⤋
Then, of course it is better. Paying off debt is always a good idea. Do it!
2006-12-19 18:36:46 · answer #6 · answered by twicewise 3 · 0⤊ 0⤋
sounds like a good idea, but check to see if there are any hidden catches if you pay of early
2006-12-19 18:37:06 · answer #7 · answered by Anonymous · 0⤊ 0⤋
I would pay off any debt as fast as I could.
2006-12-19 18:36:34 · answer #8 · answered by Lisa E 6 · 0⤊ 0⤋