Author Topic: Low interest loan questions  (Read 1290 times)

RavensBrew

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Low interest loan questions
« on: July 14, 2014, 06:23:14 PM »
I have a car loan with 1 and a half years on it. The loan is for 3%. I refied my mortgage 2 years ago and now it's at 3.25% with 28 years left. Wouldn't it be better to put my money somewhere where it can earn 5 to 6 to 7% interest rather than pay off either of these loans?

steadierfooting

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Re: Low interest loan questions
« Reply #1 on: July 14, 2014, 07:07:08 PM »
I think it's up to you, if it doesn't bother you, if you are REALLY saving and investing the money that could go to the principle, and the cashflow isn't an issue.

I had a student loan at 3% in the 2000s when ING was paying 5%+ on their interest rates and thought, "well it's stupid for me to pay extra with that interest rate".  But I never saved it.  Then I had a car loan at 2.99%.  So then we go to buy a house and there's 500 a month tied up in low interest loans.  I paid both off real quick, less money going to it.

before realizing financing is stupid I bought a new car after my last died in 2010.  2.99% again, but this time I despised thatt loan and owing money so I paid it off in 1.5 years.  I'll never take a car loan out again, or borrow money, I don't even care if it's 0% loan.  That's just me though.

RavensBrew

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Re: Low interest loan questions
« Reply #2 on: July 14, 2014, 07:16:53 PM »
So in theory, if I'm disciplined, I should invest rather than pay off a 3% loan. I could just pay cash for the loan on the car but it would bring me a few more bucks to invest the loan doesn't bother me. I'm like you though- no more car loans. Unlike you though, I would take a 0% loan in cash!

Joel

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Re: Low interest loan questions
« Reply #3 on: July 14, 2014, 08:45:01 PM »
I had the ability to pay cash for a vehicle, but instead borrowed at 1.9% and kept the money invested over the five year term. Would you do the same if you were buying the car now at that rate?