Mike "Wuzzy121". Rest in peace, brother

Go Back   Tacoma World Forums > Off-Topic > Off-Topic Discussion

Notices

Invest or Pay off truck?

Reply
 
Thread Tools Search this Thread
Old 08-11-2013, 01:38 PM   #1
Senior Member
Monster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shed
 
Monster Coma's Avatar
Name: Corey
Joined: Jun 2012, #80740
Location: Central PA
Age: 22
Gender: Male
Posts: 19,828
Monster Coma's Tacoma Gallery
Invest or Pay off truck?

Ok guys so I'm kind of in a unique situation.

As a graduation present my parents have presented me with 2 choices. They will either pay off my truck or give me $6500 that can only be used for investing purposes.

Currently I owe around $10700 on my truck and will be paying until 7/01/17. If my parents pay it off I will pay them $4500 over the next 18 months and then they will cover the rest ($6200) or they will give me $6500 and I will continue to make payments to Toyota. My interest rate with Toyota is 2% and my payments are $254 a month. I have no problem being able to afford these payments and I will have to continue making them for at least 18 months either way.

I figured that over the next 47 months I will end up paying Toyota $12200 for the truck so it would be a loss of $1500 if I keep paying for the truck. However on the other end there is the potential for a loss of money or not making any money. I already figured that if I invest $6500 and it makes 4% I will see a return of $1100 so if it only makes 4% I'm in the hole $400 but I already have money invested and if I let it sit another 5 years that amount increases.

So my question is which option would you guys recommend taking? Option A) pay the truck off, or Option B) take the money and the risk and invest?
  Reply With Quote
Old 08-11-2013, 01:40 PM   #2
Senior member
Fiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shedFiolo is one of the sharper tools in the shed
 
Fiolo's Avatar
Name: Mr.Chow
Joined: Sep 2011, #63227
Location: Atlanta,Georgia
Gender: Dude
Posts: 4,144
Fiolo's Tacoma Gallery
I'd go with option A and maybe do a small mod or two also
  Reply With Quote
Old 08-11-2013, 01:42 PM   #3
Senior Member
MGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shed
 
MGMTacolover55's Avatar
Joined: Jan 2013, #96545
Location: Orygun
Gender: Male
Posts: 3,355
MGMTacolover55's Tacoma Gallery
Option A since once your truck is paid off you can then save money to mod your truck more
  Reply With Quote
Old 08-11-2013, 01:43 PM   #4
Senior Member
Gelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shedGelo760 is one of the sharper tools in the shed
Joined: Oct 2010, #44862
Location: Oceanside
Gender: Male
Posts: 14,123
Gelo760's Tacoma Gallery
Pay off truck . It's a guaranteed winner
  Reply With Quote
Old 08-11-2013, 01:47 PM   #5
Senior Member
Monster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shed
 
Monster Coma's Avatar
Name: Corey
Joined: Jun 2012, #80740
Location: Central PA
Age: 22
Gender: Male
Posts: 19,828
Monster Coma's Tacoma Gallery
I wont be modding my truck for a long time so if your answer is just so I can mod the truck please think around that lol.
  Reply With Quote
Old 08-11-2013, 01:51 PM   #6
Senior Member
hpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shedhpvds is one of the sharper tools in the shed
 
hpvds's Avatar
Name: Manie
Joined: Apr 2010, #35497
Location: Ashburn, VA
Age: 25
Gender: Male
Posts: 231
hpvds's Tacoma Gallery
Option B. Invest, let the money grow + paying off the loan (assuming it is in your name) will build credit, which will help alot down the road. Paying it off now, doesn't gain you anything, so at least that 1500 that you lose, will be an investment in yourself for the next loan that you have to take.

Note: I was given a similar option -- given similar amount on my 21st which I was allowed to use to a down payment or could leave invested. I left it invested and its still there today, worth quite a bit more, and my credit rating is quite good for being a 24 year old.
  Reply With Quote
Old 08-11-2013, 01:53 PM   #7
Senior Member
MGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shedMGMTacolover55 is one of the sharper tools in the shed
 
MGMTacolover55's Avatar
Joined: Jan 2013, #96545
Location: Orygun
Gender: Male
Posts: 3,355
MGMTacolover55's Tacoma Gallery
Quote:
Originally Posted by Monster Coma View Post
I wont be modding my truck for a long time so if your answer is just so I can mod the truck please think around that lol.
Paying off my truck freed money up for me to pay for college so paying it off is the best winner
  Reply With Quote
Old 08-11-2013, 01:54 PM   #8
Possibly Batman
NeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to behold
 
NeoMoose's Avatar
Joined: Dec 2009, #27144
Location: Houston, TX
Gender: Male
Posts: 188
NeoMoose's Tacoma Gallery
Send a message via AIM to NeoMoose
Answer is very simple for any question like this.

Look at your interest rate. Do you plan on your investment growing more or less than said interest rate?

If Investment Return > Interest Rate, then invest.
If Interest Rate > Investment Return, pay off the loan.

Might as well just lock this thread.
  Reply With Quote
Old 08-11-2013, 02:00 PM   #9
Senior Member
Monster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shed
 
Monster Coma's Avatar
Name: Corey
Joined: Jun 2012, #80740
Location: Central PA
Age: 22
Gender: Male
Posts: 19,828
Monster Coma's Tacoma Gallery
Quote:
Originally Posted by NeoMoose View Post
Answer is very simple for any question like this.

Look at your interest rate. Do you plan on your investment growing more or less than said interest rate?

If Investment Return > Interest Rate, then invest.
If Interest Rate > Investment Return, pay off the loan.

Might as well just lock this thread.
It's not that simple.. If you could tell me which stocks would have what rates over the next 4 years you could have all my monies
  Reply With Quote
Old 08-11-2013, 02:01 PM   #10
Senior Member
Larry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shed
Joined: Jul 2010, #40895
Posts: 5,999
Larry's Tacoma Gallery
If I was your dad, there would be no such choices. I would make the investment in your name and you can pay for your truck. I assume you can afford the truck payments.
  Reply With Quote
Old 08-11-2013, 02:03 PM   #11
Senior Member
Monster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shed
 
Monster Coma's Avatar
Name: Corey
Joined: Jun 2012, #80740
Location: Central PA
Age: 22
Gender: Male
Posts: 19,828
Monster Coma's Tacoma Gallery
Quote:
Originally Posted by Larry View Post
If I was your dad, there would be no such choices. I would make the investment in your name and you can pay for your truck. I assume you can afford the truck payments.
Quote:
Originally Posted by Monster Coma View Post
I have no problem being able to afford these payments and I will have to continue making them for at least 18 months either way.
.
  Reply With Quote
Old 08-11-2013, 02:05 PM   #12
Senior Member
Larry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shedLarry is one of the sharper tools in the shed
Joined: Jul 2010, #40895
Posts: 5,999
Larry's Tacoma Gallery
There you have it.

Invest.
  Reply With Quote
Old 08-11-2013, 02:05 PM   #13
All Glory To The Hypnotoad
ziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shed
 
ziggynagy's Avatar
Joined: Nov 2011, #66601
Location: Stoughton, MA
Gender: Male
Posts: 1,268
ziggynagy's Tacoma Gallery
Couple thoughts OP:

With only $10.7k left @2% and 47 payments remaining, you'll only be paying around $430 interest over those payments (most interest is paid at the beginning of a loan). So if you want to look at this as FV, investing a PV of $6.5k and allowing the value to compound you would only need a rate or return over 1.6% to break even. Let the money sit and earn so you're not paying cap gains... anyone think it weird to discuss finances on a truck forum?

Congrats on graduating!!! Now take the cash and start investing.
  Reply With Quote
Old 08-11-2013, 02:10 PM   #15
Senior Member
Monster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shed
 
Monster Coma's Avatar
Name: Corey
Joined: Jun 2012, #80740
Location: Central PA
Age: 22
Gender: Male
Posts: 19,828
Monster Coma's Tacoma Gallery
Quote:
Originally Posted by ziggynagy View Post
Couple thoughts OP:

With only $10.7k left @2% and 47 payments remaining, you'll only be paying around $430 interest over those payments (most interest is paid at the beginning of a loan). So if you want to look at this as FV, investing a PV of $6.5k and allowing the value to compound you would only need a rate or return over 1.6% to break even. Let the money sit and earn so you're not paying cap gains... anyone think it weird to discuss finances on a truck forum?

Congrats on graduating!!! Now take the cash and start investing.
We talk about everything else so why not this lol. and how did you get $430? perhaps I'm using the wrong formula.

P=C(1+(r/n))^nt

Or I=prt?
  Reply With Quote
Old 08-11-2013, 02:17 PM   #17
Senior Member
miniceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shedminiceptor86 is one of the sharper tools in the shed
 
miniceptor86's Avatar
Army: Cook, 589th Combat Engineers, Ahn Khe, RVN
Name: Jim
Joined: Feb 2008, #4799
Location: McGregor,IA
Age: 67
Gender: Male
Posts: 490
miniceptor86's Tacoma Gallery
Quote:
Originally Posted by Larry View Post
If I was your dad, there would be no such choices. I would make the investment in your name and you can pay for your truck. I assume you can afford the truck payments.
I agree, 2% is a great loan rate. A mutual fund would be a good bet.
  Reply With Quote
Old 08-11-2013, 02:20 PM   #18
Possibly Batman
NeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to beholdNeoMoose is a splendid one to behold
 
NeoMoose's Avatar
Joined: Dec 2009, #27144
Location: Houston, TX
Gender: Male
Posts: 188
NeoMoose's Tacoma Gallery
Send a message via AIM to NeoMoose
Quote:
Originally Posted by Monster Coma View Post
It's not that simple.. If you could tell me which stocks would have what rates over the next 4 years you could have all my monies
That reply = pay off the truck.

You can easily invest money in things other than stocks and be all-but guaranteed certain returns. Jumping straight to things about stock market psychics indicates a lack of investment knowledge in the first place. Keep learning and get rid of the debt.
  Reply With Quote
Old 08-11-2013, 02:21 PM   #19
Senior Member
Monster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shedMonster Coma is one of the sharper tools in the shed
 
Monster Coma's Avatar
Name: Corey
Joined: Jun 2012, #80740
Location: Central PA
Age: 22
Gender: Male
Posts: 19,828
Monster Coma's Tacoma Gallery
Quote:
Originally Posted by Texoma View Post
10700 x 4 x 0.02 = $856
Hmm I seem to have done my calculations wrong lol
  Reply With Quote
Old 08-11-2013, 02:21 PM   #20
All Glory To The Hypnotoad
ziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shedziggynagy is one of the sharper tools in the shed
 
ziggynagy's Avatar
Joined: Nov 2011, #66601
Location: Stoughton, MA
Gender: Male
Posts: 1,268
ziggynagy's Tacoma Gallery
Here's a copy of an amortization table I wrote. It balances to the penny to my home mortgage...

Oops, wrong ling... use this one. https://docs.google.com/spreadsheet/...0E&usp=sharing
  Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
How much would you guys pay for my truck? tacoftw 2nd Gen. Tacomas 23 07-10-2013 07:19 AM
What did you pay for you truck rhowell 2nd Gen. Tacomas 45 12-23-2011 08:01 AM
How much is this truck worth.....or would you pay. ryanf 2nd Gen. Tacomas 8 08-03-2011 05:13 PM
What would you pay for this truck GSK9 B1T3 2nd Gen. Tacomas 13 06-02-2011 12:11 AM
how should i pay off my truck, or should i? gupster88 Off-Topic Discussion 19 10-16-2009 10:54 PM


Copyright © 2014 Tacoma Forum. Tacoma World is not owned by, or affiliated with Toyota Motor Corporation.