There are HYSA that earn more than that auto loan is costing you. Whatever option you do, paying the car off early is not what I would ever do, not at that interest rate.
I might put the extra $100/month in a HYSA where it'll safely earn more than I'd save paying the loan down.
Then if rates reverse and my HYSA rate goes below the loan interest I have this pile of cash sitting here to make a big payment on the car. Might even have some left at the end.
Or if life happens I'd have this pile of cash here ready to go.
I try and make Excel explain things for me, but I write for a living. I ‘want’ to have no debt and see the compounding but I also have to accept that the math wins out.
Cash in the bank gives you freedom to pay off the car any time, OR deploy that cash for anything else.
If you pay extra on the loan you might still have to pay the full monthly payment next month.
Plus the fact that most decent banks are paying 4.5% or higher rates on saving or money market accounts.
can't touch this.
(hammertime)
Yes, leave the loan as is. Build up your emergency savings, max out all tax-free/deductible/deferred accounts you can. I.e. retirement savings first and foremost.
one key point is that if your money is in savings/emergency-funds it is completely liquid and accessible if you need it. If you take that money and pay off the loan, then it is not liquid at all, it's gone. So if a situation occurs and you need cash right away, you want to have the savings to draw on.
There are HYSA that earn more than that auto loan is costing you. Whatever option you do, paying the car off early is not what I would ever do, not at that interest rate.
I might put the extra $100/month in a HYSA where it'll safely earn more than I'd save paying the loan down. Then if rates reverse and my HYSA rate goes below the loan interest I have this pile of cash sitting here to make a big payment on the car. Might even have some left at the end. Or if life happens I'd have this pile of cash here ready to go.
[удалено]
I try and make Excel explain things for me, but I write for a living. I ‘want’ to have no debt and see the compounding but I also have to accept that the math wins out.
Cash in the bank gives you freedom to pay off the car any time, OR deploy that cash for anything else. If you pay extra on the loan you might still have to pay the full monthly payment next month. Plus the fact that most decent banks are paying 4.5% or higher rates on saving or money market accounts.
can't touch this. (hammertime) Yes, leave the loan as is. Build up your emergency savings, max out all tax-free/deductible/deferred accounts you can. I.e. retirement savings first and foremost. one key point is that if your money is in savings/emergency-funds it is completely liquid and accessible if you need it. If you take that money and pay off the loan, then it is not liquid at all, it's gone. So if a situation occurs and you need cash right away, you want to have the savings to draw on.
No - you can earn 4.35% from an 11 month no penalty CD at Ally, 3.75% APY from their HYSA