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RouxDog91
LSU Fan
Denham Springs
Member since Mar 2014
117 posts

Should I pay off car note with savings??
It seems like a good deal to me, but I'm no money guru.

I owe $19k on the truck, at around 4% interest. Thinking about taking from savings, which would cut it in about half, to pay it all off... I'm no baller.. savings account interest is basically 0.

Is it a good idea?


Fat Bastard
Boston College Fan
Member since Mar 2009
40129 posts

re: Should I pay off car note with savings??
so you have 38k in savings?

how much do you make annually?

do you have investments?

what do you have?

do you have a house note?

if that 38k is all you have then no i would not pay it off at that interest rate. if you have lots of money elsewhere and the principal used to pay it off can be replaced within a fair and quick timeframe then you can pay it off.

you need to provide way more info.
This post was edited on 5/13 at 11:58 am


Popths
LSU Fan
Baton Rouge
Member since Aug 2016
1707 posts
 Online 

re: Should I pay off car note with savings??
As long as you keep 6 months liquid as emergency savings, go for it. Without the note, you can ramp up your savings quickly if you are disciplined.


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NPComb
LSU Fan
Member since Jan 2019
2041 posts

re: Should I pay off car note with savings??
Usually pay your highest interest debt off first unless you are receiving tax breaks from it.


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Vastmind
LSU Fan
Baton Rouge
Member since Sep 2013
1946 posts

re: Should I pay off car note with savings??
I say pay it because I don’t keep car notes. Having a car note one’s whole life is probably the number one thing keeping people broke in America.

People think they can afford cars if they can swing the note. I think if you can’t pay cash for it, then you can’t afford it with the only exception being a mortgage because houses usually appreciate.



Fat Bastard
Boston College Fan
Member since Mar 2009
40129 posts

re: Should I pay off car note with savings??
quote:

I say pay it because I don’t keep car notes.


again, if it is his only note it is not a big deal. you do not know if he will have one his whole life. he has answered zero questions in order to help him. looks like another hit and run poster, the type i abhor here. if they were that worried they would answer the questions.

This post was edited on 5/14 at 10:10 am


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30
fjlee90
LSU Fan
Baton Rouge
Member since Nov 2016
1991 posts

re: Should I pay off car note with savings??
quote:

Having a car note one’s whole life is probably the number one thing keeping people broke in America.


That and people don't save for retirement.


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Jp1LSU
LSU Fan
Key West
Member since Oct 2005
1316 posts

re: Should I pay off car note with savings??
Not enough info but for me if I had a bill I can afford but was paying moderate interest on I wouldn’t wipe out my savings to get rid of it because should something new come up then what do you do? Sell the car?
When I was younger and paying off things and saving I wouldn’t trade paying off a car faster by not saving for retirement. The money stayed split into things not solely focused on getting rid of one bill.


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Twenty 49
LSU Fan
Shreveport
Member since Jun 2014
11239 posts

re: Should I pay off car note with savings??
I avoid debt, but I also avoid having so little cash savings that I can’t handle matters like a car repair, new roof, vacations, etc. without incurring more debt. Eventually it builds up enough to pay cash for cars, home remodels, etc.

With just 4% on the car note, I’d lean to continuing to build that savings. Maybe pay a little extra principal on the note, but don’t wipe out my savings. For sure look for a better place to park the cash. Should be able to easily get 2% and more in FDIC insured accounts like Capital One money market.


tiger81
LSU Fan
Brentwood, TN.
Member since Jan 2008
9079 posts

re: Should I pay off car note with savings??
Car notes keep ya broke. Pay it off, pay yourself the car note.


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PhiTiger1764
LSU Fan
Lurker since Aug 2003
Member since Oct 2009
11478 posts

re: Should I pay off car note with savings??
It’s a great idea. I would pay it off yesterday.


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Jag_Warrior
Virginia Fan
Virginia
Member since May 2015
1011 posts

re: Should I pay off car note with savings??
quote:

With just 4% on the car note, I’d lean to continuing to build that savings. Maybe pay a little extra principal on the note, but don’t wipe out my savings. For sure look for a better place to park the cash. Should be able to easily get 2% and more in FDIC insured accounts like Capital One money market.


As Fat Bastard said, he didn't provide enough basic information to give an informed answer... and he hasn't come back. But most people are safe with having 3-6 months of expenses in an emergency fund. With $38K in the bank, if his expenses aren't more than $3-4K per month, he should be more than OK to kill off that truck note. He'd still have $19K left over. At say $3500 in expenses, that's still over 5 months in the bank.

And yeah, putting the emergency fund in a high(er) yielding account would definitely be smart.
This post was edited on 5/15 at 7:02 pm


deeprig9
Georgia Fan
Member since Sep 2012
33665 posts

re: Should I pay off car note with savings??
And if he's toward the back end of the note, he's already paid most of the interest anyway, he's paying alot less on the remaining balance than for the original principal.
This post was edited on 5/15 at 7:39 pm


LSUDUKE
LSU Fan
Lafayette
Member since Oct 2007
917 posts

re: Should I pay off car note with savings??
You've probably paid the majority of the interest already. Quite a few years ago I owed $4700 on my truck and me and a friend split a superbowl square and each won $5000. I thought I would do the responsible thing and just pay off my truck and when I did my credit score dropped 30 points. I would not do that again.


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Fat Bastard
Boston College Fan
Member since Mar 2009
40129 posts

re: Should I pay off car note with savings??
quote:

And if he's toward the back end of the note, he's already paid most of the interest anyway,


yep and he can just keep paying notes until it hits like 5 or 6 k than pay it off yet still milk it awhile longer.

HEY OP where you at baw?

come answer the questions posed here


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Chad504boy
New Orleans Saints Fan
Member since Feb 2005
131343 posts

re: Should I pay off car note with savings??
I wouldn't, i'd put my savings in an account earning at least close to 2% thus minimizing the interest essentially paying on car note. Stay liquid and flexible.


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