Truck loan on a vehicle I use basically on weekends (co. car) - so the loan amount isn't much about $9000. The note is about $300 and I've been doubling up on it to get it down to $9000. My question is I have a decent bonus coming up and I'm considering just paying off the loan with the bonus or dump this money into the market and let it sit?
The rate is about 3.45% (loan) and the thing that I'm trying to wrap my head around is a few things:
1. the market is doing better than the interest rate I have on the loan so just dump that money in the market and let it work for me
2. By doing this I'm forgoing loosing the chance of investing $9000 I'll never get caught back up b/c the loan note is only about $300/mo. B/c once the loan is paid off the monies I was applying to the truck would just be applied to stock market.
If it was a cc it would be easier to process but the interest rate on the loan is so low.
Does this make common sense?

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Posted by makersmark1

earth

Member since Oct 2011

15885 posts

Posted on 7/3/15 at 5:43 am to Gorilla Ball

pay off the loan.

Market returns are not guaranteed.

Consider this your cash position.

After paying off the loan, dollar cost average into a low cost mutual fund by sending the same dollar amount as the loan was to a low cost mutual fund.

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Posted by foshizzle

Washington DC metro

Member since Mar 2008

40599 posts

Posted on 7/3/15 at 6:27 am to Gorilla Ball

A 3.45% guaranteed ROI isn't bad, especially these days. Frankly I think it's a tossup and would decide based on how much free cash you have sitting around in case you suddenly need a bunch.

That said it's only $9000, the return one way or another isn't life-changing. We're talking $300/year in interest and inflation alone will cut that bill by a third or more. There are almost certainly other things you can do that will save you even more money than that.

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Posted by TheHiddenFlask

The Welsh red light district

Member since Jul 2008

18384 posts

Posted on 7/3/15 at 7:06 am to Gorilla Ball

I'm usually a proponent of leveraging and investing, but I would definitely pay off he car in your situation.

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Posted by Gorilla Ball

Member since Feb 2006

11678 posts

Posted on 7/3/15 at 9:07 am to makersmark1

quote:
pay off the loan. Market returns are not guaranteed. Consider this your cash position. After paying off the loan, dollar cost average into a low cost mutual fund by sending the same dollar amount as the loan was to a low cost mutual fund.

thanks everyone - my decision has been made. Debt free besides the mortgage - feels good.

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Posted by TheHiddenFlask

The Welsh red light district

Member since Jul 2008

18384 posts

Posted on 7/3/15 at 10:00 am to Gorilla Ball

Congrats. It's a good way to live.

Now just make sure you stuff your retirement accounts with the money that you aren't paying on the car note.

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Posted by Gorilla Ball

Member since Feb 2006

11678 posts

Posted on 7/3/15 at 1:45 pm to TheHiddenFlask

Yes indeed - about 2 years ago I created a spread sheet and put down all my cc debt with interest rates etc. I was pretty disgusted with myself and vowed never to be in that situation again.
I have for the most part of my working life saved 15% and contributed to Ira and even have several roth accounts that have done quite well, but I guess I failed in paying down cc debt.
Well it didn't happen over night but took about 18 months to remove that debt.
So the money I was using to pay cc cards I upped my investment options

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