fatmatt0116

Trying to decide whether to pay off the note for my Turbo S in one chunk or multiple payments. I've already made payments for one year but I've got the nut to pay off the shebang (102k) and end the $200/month interest charges on the 5 yr. finance. It's a 179er anyway. Wife says I should hold onto the cash and keep making the payments. I'd rather just end it after 1 year since I gotta buy a bigger house and don't want the payments.

Wonder if it's better for my credit to pay it all off at once or 2-3 payments?

nk215

It looks like your APR is around 2%, that's a relatively low rate. If the money you have around is in cash then pay it off since you probably only get around 1% of interest from the cash.

If the money you have saved is in the stock market/bond/investment account then keep making the payment since there's little sense to take $$ out when the market is in its current state.

There's a psychological benefit of carrying no debt.

Dan87951

Take the cash and invest it. With auto loan interest rates so low you can put your money to work for you with relative ease.

Dilberto

Make 2 additional payments.....one at beginning and one at years' end. Make sure you NOTE on the check or electronic payment "To Principal ONLY". Turn a 60-month payment into a 45-month!

Olivers_996

Some RM want both parties to be 62 or 65. The only advantage as mentioned is the income requirement for a HELOC. I know a couple of people with 7 figures of real estate( retired), but don't qualify for HELOC because of income requirements and in this case RE income didn't count.

kino1161

Dilberto,
Sounds interesting. Can you elaborate more on that?

Quadcammer

Whats there to elaborate on. If you make two principal only payments every year, you shorten the length of the loan. I didn't do the math to check if his month count is correct, but its certainly possible.

slavie

Do you like making the payments? When you think about how much money you will need next month to meet all of your obligations, do you wish you had more payments and hope that your cash investments grow faster, or would you rather know that your property is your property and there is no chance of a repo truck showing up in case you lose your job or whatever? It's a personal choice, plenty of people go either way. Personally, I like the peace of mind of knowing that I'm not chained to anything, so I paid off my loan after a year just to be done with it.

As for the credit score question, it's not worth the money to pay interest you can avoid in the hopes that your credit score will go up 3 points. Paying down the loan early will not have a negative impact on your score. If you simply pay down your Credit Cards (don't carry a balance) every month and have no loans, you will have "excellent" 780+ credit score (assuming you don't have any missed payments or other negative info already). That simple. I have no missed payments, carry no CC balance, and had 3 loans that were all paid off early - 800+ credit score.

jeff spahn

We do this on our house. We make 1.5x the payment in two week increments.

thesteve

All I know is I could have paid cash for something nice off the showroom floor with what I lost in my retirement over the past couple of weeks.

Quadcammer

When you consider how much your retirement had gone up in the year prior, its kinda hard to complain, isn't it?

thesteve

I try to keep a 'glass half-full' approach to life but usually only focus on the negative.
Plus I meant to "cash out" and shift my portfolio to less volatile investments but put it off since I have no clue how that stuff works. It'll be fun to watch it continue to drop...
Need to find a financial message board...ha