My only concern is that if I take the bonus and pay off the car, it alleviates any "oh shit" fund. Yea, I could have this car finally paid off but then the day after my engine goes or something.
I guess its a gamble either way I cut it. I've been paying on this loan for 3 years, my credit is getting back up there, slowly. I don't know much else I can do.
You don't have an 'oh shit' fund, you are living paycheck to paycheck. If you don't pay it off, and the engine blows, and you spend the $5k windfall on fixing your car, you will still owe $5k @ 20% interest, for your car.
If you do pay it off, and the engine blows, hopefully you can get a lower interest rate on the next loan as you've shown you can pay it off.
However, if you pay it off, and the car doesn't explode, then you can start putting aside the $xxx monthly car payments to create a proper emergency fund. Seriously, +1 on the case study.