r/personalfinance•
AkumaMan

Should I just pay off my car loan in 1 single payment?

Debt

So basically i purchased a vehicle and financed $11,800 at 3.44% APR. The reason i financed was because:

-I assumed I would have gotten a better interest rate around 0%(high credit score) but it turns out that 0% is for only select car models

-$500 rebate to car if I were to finance through Honda

So i will be paying about $1,000 in interest over 5 years if I do regular payments of $214 monthly. Since I am also saving for a home purchase in a few years (savings in a 1% savings account), should I just pay it off immediately and avoid paying the interest assuming I wouldn't invest the $11,800 anywhere other than my savings account?

I would have 6 months+ emergency fund after paying it off (i live at home so expenses are low), and after I would be able to save aggresively for a downpayment on a home.

Posted Aug 29, 2016, 11:05 PM UTC

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