Pay it off?

Some people don’t like paying interest

 

I got 1.49% for 5 years. I'm on the boat where I don't mind paying low interest if it can be better spent elsewhere. I'll be finished with mine soon but really not in any rush to pay it off. Don't see a point. I just bought a 4 unit apartment building with my money instead.

 

Here's a sincere question. If OP has a credit score in the 800's and already has a mortgage and has some cars, why would he have such an interest in trying to maximize credit score by a few percent at a cost of paying interest on a car? I can see trying to get additional houses for investment purposes, and a >820 credit score would help with that, but if you are not an active investor based on leveraging personal loans, why is there such a big focus on credit score in the US? I'm assuming even with paying off vehicles, availability to good dividend-paying credit cards would be unchanged.

As a brief history, I'm locked into a mortgage and cars are paid off (G35, tacoma, camaro- older but fun cars, no need for a new one). I wouldn't want another house or any sort of big item unless I paid all cash for it (not anytime soon lol). So what is the major focus on credit score for? I'm sort of over worrying about it, and wonder what I'm missing. I certainly wouldn't pay a monthly interest fee to boost my credit score as I don't think it would do anything for me?

 

Made my last payment today! 15k down, financed 25K @ 2.99%.
Paid $770 of interest in 24 months and spent $3550 on upgrades.

 

If you have that much in dead saving you need to talk to a finical advisor

 

Here's a sincere answer. Many in the US are like you describe, but not all of us.

The FICO (credit) scores are not strictly an assessment of credit worthiness. They are much more an assessment of how profitable you are for the banks. A super high score means the financial companies make a lot of $ off you. That requires good payment history and being a moderate to high user of credit.

So having a high score is good for your fincial wellbeing. But having the highest score is bad for your fincial wellbeing. It means you're losing a lot of money to interest.

Its been a year or two since I checked but then my credit score was slightly under 800. That's with decades of history and never a late payment (well, I think I got sloppy once and was a couple days late on a credit card when I was 18 - over 20 years ago). We haven't had debt for several years. The house is paid off and recent vehicle purchases were for cash. We use credit cards but pay them in full every month. If I wanted a loan on something I could get a great rate. But I don't expect to ever have the highest FICO score because I will never be a super profitable customer.

A few years ago a credit card we'd had for many years annoyed me so I cancelled it. That's supposedly a bad thing to do (since it had a long history), but we have several cards with long history, so I don't really care. If it dropped the score, it wasn't by much, and it wouldn't affect me anyway.

If the OP thinks he might need liquidity, he should keep the loan since its cheap. If he's unlikely to need to the liquidity, the math is clear, he should pay it off.

I have nothing against debt, I think it is a great tool when used responsibly and wouldn't want to insult anyone's responsible use of debt.

 

Thanks, I had never thought of it that way, and it is exactly what I was missing. Cheers.

 

Pay that shit off, no doubt. That interest rate is not great. Mine is 0.9% for 48 months and I will have it paid off probably around 40 month mark simply because I don’t love having a payment. We also bought my wife a RAV4 Adventure a 0.0% for 60 months, unless I’m basically getting free or negative interest (as related to inflation) no thanks, you don’t get rich making payments. If you have a huge savings account like that OP I wouldn’t even think twice about it. Not sure if you were actually referring to a “savings” account but if you are eligible and are not fully funding a 401k (I split between Roth and traditional) and also a Roth IRA, I would look seriously into that. Simply saving your money is great but if you aren’t taking advantage of compound interest (especially over these past 3 AMAZING years) you’re really missing out. Just my thoughts.

 

why not?

 

Geesh, because obviously, after reading this thread, it is clearly a good thing to pay the banks interest.

 

I just like feeling that when I receive my paycheck, it all goes to me. Sure, there are variable expenses like utilities. But, if I stop using their services, I don’t owe them anything. It’s different than debt.

 

Please spend some time calculating what you can make off the money you spent vs the money you could invest by just paying the required amount on the truck loan.

Over 30 years, it's a big number. Less than 10 years, it's not really worth it to pay the truck off.

 

im not very knowledgeable on investments, it’s something I would like to learn more about but from what I do know, those seem like really decent ROI for the one year period no?

 

Get two Raptors.

 

I am Licensed CPA. And financial consultant for F500 companies. I know the math, I don’t care.

it doesn’t consider being up shits creek during a lay-off season, or that the FED has been depressing interests rates for more than 20 years.

I remember when the cards were pulled in 2008. Millions of debt loaded individuals went bankrupt. Cash heavy debt-free individuals bought up assets like crazy and laughed at everyone.

miss one payment with a bank due to hardship. See if they care about you.

 

Yes, very good one year but not the norm, it’s why long term is best. This years cover the not so good years. I’ve been investing since 1980, I don’t do the investing, I use Edward Jones for my old 401k, this is my current one with Wells Fargo

 

The problem I have with this thought process is that by maintaining debt you could otherwise pay off, so you can invest in the market, is little different than just borrowing money to invest.

 

I am about to pay mine off. The thought of not having a payment is enlightening

 

If you have enough cushion after paying it off, I'd definitely do it. Not sure what you're doing for your banking, but Ally Bank has a good high-interest savings account. Or put the money in a Vanguard brokerage account and make more in the market.

The only time I'd keep the payment is if you have like 0% or 0.9% loan like the auto manufacturers sometimes do as a promo.

 

I checked into tinker, and they have a better interest rate on savings accounts so I may move some money there. The payoff I was quoted was wrong so I had to make an additional payment of $11.53, so now she’s mine.