Hi everyone,

I'm new to the forum and have a question in which I have heard positive and negative from.

In April of 2006, I financed a new vehicle in which the final loan was $24,400. My monthly payment is $356 which I never send the minimun. I always try to send $500 to try and pay off the loan quick and save myself the huge interest. I now owe $9,200 and hope to pay the remaining by the end of this year.

I have asked different people and I have received unclear answers. Some people agree to this while others tell me it can bite me in the a**.

My question is if it is worth paying out my car this fast to save the interest or can this backfire on me if I ever want to trade my car in later on before I finish paying it or after.

Thanks in advance

Unless you get a tax benefit like with a home or student loans, you are always better off paying it off. You may want to consider paying off credit cards and other unsecured debts first though, since they tend to have higher interest rates.

I don't know your situation though, but from what you've told me you're right on track, and could turn those payments into some solid gains if your car lasts for a while after you pay it off. If you can get 3 years with a paid off car, you'll be able to buy your next one outright if you save that 500 each month. That isn't completely realistic, but you'll have a fund to pay for repairs and will be in a better spot when your car dies (hopefully not for a while)

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Never sign intellectual property agreements...

Of course, it is always nice to pay off a car because you save money. There are some cases where paying off a note faster is not the best way to go. Let's say you have a $350,000 mortgage note that runs you about $2,500 a month; assuming you locked in at 5.5% for 30 years. Well, just because you could easily afford a 4,500 monthly payment does not mean you should do it. If you invested that money wisely, your return on that may be higher than the interest you paid back on the mortgage note for 30 years. In other words, the interest you would pay on the note over 30 years is roughly $365,000 totaling about $715,000 you paid out. Now if you invested that extra $2,000 a month, SMARTLY, in real estate development which usually yields 20% sometimes higher then you would have a ton of money at the end of 30 years and along the way.

Saving money on interest is never a bad idea. I payed my truck off the same way. I don't manage my money in a way that worships the almighty fico god, I use credit to my advantage. If you pay your bills and manage your money good, you will always have someone trying to lend you money.

I personally choose to never borrow money for cars or consumer goods ever again. I am debt free and save & invest for the things I want. I have two CC's for gas purposes and PIF each month. I don't know what my score is and don't care. It feels real good. Good luck.

Good Answer Mr Mark.....

Pay it off!

The way I buy cars now is to save 400 a month and pay cash for a two year old car. The fund buy's my and my wife's cars and funds our repairs.

Pay it off and put the $500 that you are paying monthly now in a mutual fund. The note doesn't sound like its hurting you any. Your motivation is saving interest over time.

Over 20 years at 8% interest, just to be conservative, you would have $295,000. You would have contributed only $120,000.

Is that a good exchange? I think so.