RSS FeedIs It A Good Idea To Pay Off A Car Loan Early? | EUROPE Promotion
It’s always better to pay those off if you can. It would be tough to really get a better rate of return on investments. It can happen but highly unlikely. If this was a home and you had a 5% rate I would say keep making payments but at almost 10% I don’t really see the benefit of making payments especially since it’s a declining asset. Just pay it off and invest the extra cash you would have been paying on the loan.
Pay it off. Just make sure when you apply extra payments note on the check. Payment amount and amount applied to principle separately. If not some scum bag banks will apply the extra payment toward interest. By paying it off early you are trying to avoid extra interest. Example write in memo line Payment 540 Principle 160 Total 700.
It shouldn’t hurt your credit… after all you have 8 - 9 months recorded of on time payments. My husband and I are in a similar situation. I used to have bad credit, and my husband’s credit is fine…. but he is an immigrant and has a short US credit history, so we are trying to build his credit also. We could actually afford to pay cash for our car, but financed it for the creidt boost (and also to get a special rebate only available through financing). So we were advised to keep it open for at least 6 months. We paid most of it off the first month to minimize interest payments. We currently have $500 still owing, we don’t have to pay anyhting until 2011… but we are going to pay it off in a few months.