Pay off car now or make payments and put money in savings?

Question

pay off car now or make payments and put money in savings?

Which is better for me?

If I pay for the car in full now, I pay $10,334.

Otherwise, I pay $157 / month for 60 months (5 years) plus $4050 extra at the end of 60 months as follows:

Year 1: $1884

Year 2: $1884

Year 3: $1884

Year 4: $1884

Year 5: $1884 + $4050 = $5934

(Total: $13470)

There is no interest to calculate in the monthly payments. That's what the extra $4050 is.

If I decide to make payments, I can invest the money in the following savings account options:

minimum of $100 for 1 year @ 4.25%

minimum of $1200 for 1 year @ 4.375%

minimum of $100 for 2 years @ 4.3%

minimum of $1200 for 2 years @ 4.5%

minimum of $100 for 4 years @ 4.75%

Assume I have exactly the $10,344 to either pay or invest.

What should I do?

Please explain your answer as best as possible or at least say why.

THANKS SO MUCH!

Answer 1

Quickest answer is pay off car loan. But where do you think interest rates and inflation  are heading in the next few years?

How secure is your job or industry you are in?

Answer 2

Pay off the car note so she can own it free and clear. It will be one less bill she will have to worry about for the next 5 years. She doesn't need the loan. If she's never short of work, she can easily build another money nest that she can invest. Why borrow when you can pay cash and fuhgetaboitit?

Answer 3

Pay off the car, then put the money you would have paid each month into savings.  Over the 60 months, you save $3,000 more than you would have putting the money directly into savings, not counting the interest.