Pay of car or wait?

[Jeffwa365]

Hey guys I have a question I’m not really sure about and wanted to get opinions. I have a car loan I’m ready to pay off NOW to free up monthly cash flow to invest every month. I usually don’t care about day to day market moves but I’m selling investments to pay off loan. I have a wealthfront account that had 11k a week ago. After this week it now has 10k. My question is should I sell now to pay off loan which is just under 10,000 dollars, or should I wait a few weeks let’s the market recover to get closer to that 11k range then cash out and am left with about 1000 in the account. If I cash out now I’ll be left with about 250 bucks. What do you all think?

[sokoloff]

Your question is market timing dressed up in some other words/form.

Are you a good market timer? (Probably not.)

If you’re asking whether it’s better to pay off the loan, using investments, in order to free up cash flow in order to put back into investments, I’d look to whether your investments expected return is higher or lower than the loan interest rate (including insurance if you’d drop insurance once the loan is paid off) on a post-tax basis. If your loan is under 4%, it’s probably better to keep paying the loan rather than pull money out of investments only to gradually put it back in. If it’s over 9%, probably better to pay it off. In between, take a closer look.

[shinn497]

pay it off

[NoStacheOhio]

What's the rate on the loan? I'd be inclined accelerate the payoff with cash flow rather than sell shares (which is also a taxable event). Also, what's the car?

[Tuskalusa]

Pay it off and breathe easy without the debt.

[YoungGranny]

I'd leave the money in investments to grow and work on reducing expenses to free up money to pay off the car. If you want to pay off the car just to start investing again it seems like you would come out ahead to leave the lump sum invested and chip away at the car. Unless of course the interest rate on your loan is extremely high.

[Fiscal_Hawk]

Lots of unknown variables here. What is the interest rate on the loan? Do you have any cash in savings or checking account?

In general, I'm not a fan of trying to time the market. I'm also not a fan of cashing out a market account to pay off debt. How long will it take to replace that 11k?

It might benefit you to post a full case study to get a better idea. Without that, my general advice is to try to accelerate the payment through your monthly cash-flow.