Should I pay off my car debt if I have the money or should I keep the cash in savings?

Question

int. rate is %6.5

savings is adequate

car debt is $11k

Answer 1

Generally the rule of thumb is if the interest rate on your loan is MORE than the interest you could earn in savings, then you should pay off the debt first.  If you can earn more interest by putting it in savings, then do that.  

It sounds like you should probably just pay off the debt.  

Answer 2

don't even think about it pay it off the longer you wait the more you will have to pay just pay it and then u wont have another bill to worry about. Hope you make the right decision

Answer 3

I would pay off the car.  Your car will lose value over time.  You don't want to have to sell the care and owe more on it than it is worth, besides the longer that you take to pay off the loan the more money that you spend on the car.  The savings account will probably not return as much as you will save in car payments.

Answer 4

depends on how much you owe on your car

Answer 5

you should so pay off the debt that way it doesnt grow and then when you get back that money you can proudly own it without knowing that you really shouldn't cuz of debt

Answer 6

keep in in the bank you can open a CD and gain interest in it  

Answer 7

pay it off

Answer 8

pay it off, cuz that way you wont need to pay interest, and it will end up going towards the car anyway so why save it

Answer 9

I would pay the car first to get that off your shoulders then start saving, if you dont pay off the car, the amount will prob go up. So get that done.

Answer 10

Both!

You should keep enough in savings to sustain your basic living expenses for at least 3 months.  This is so that just in case something happens like an illness, injury, layoff, etc. you can still pay your bills and monthly minimum debt payments

Use whatever is left to pay down the car debt.

Answer 11

your car payments are structured,

There Is no savings to pay it off,

You won't save on interest.

Why give them your money all at once.

Car loans aren't like home mortgages.

Save your free cash for emergencies.

The interest is figured into your payments.

You owe it all regardless.

Make your scheduled payments don't put yourself out of 11k !!!!!!!

It makes no sense at all!

No one here can understand that.

Answer 12

Unless you have your money invested in something that's paying more than 6.5% interest -- which is very unlikely -- pay off the car.

Then, take it one step further by making the same car payment each month, only make it into your savings account.  

Answer 13

Unless you are getting better than 6.5% from your savings, pay off the car.

Answer 14

It doesn't matter what the ratio is, pay off your car debt.  Why?  Because you don't know what the future holds.  Should you lose your job, become disabled, etc., you may not be able to pay your debt and your car would end up being repossessed.  This will not be good for your credit score.  So if you can pay it off now, the better.  It will also show up on your credit score as a good risk just in case you decide to get another car down the road.

Answer 15

Pay it off. You dont want that bothering you later.

Answer 16

put some in savings and some in paying the car more in paying your car.

Answer 17

pay your car off!! Then, you can then use your car payment money and put it into savings along with whatever else you are saving..build your savings back up again.. it will be worth not having a car payment for the rest of your life... and keep it till it poops out on you!! read this book by dave ramsey called, "The total money makeover." boy is it good.. you can it it at barnes and Noble for 19.99

Answer 18

PAY YOU CAR OFF! Your credit will benefit from paying off your car!!

Answer 19

Is that a compound rate or annual rate?  What do you think Inflation will do? What rate are your saving or investments making?

My bet is that the interest rate on a car loan is significantly higher than your investments are making. Unless you need to have extra cash on hand, I'd pay off the debt ASAP, assuming there is no penalty for early payment.

Answer 20

Pay off your car before interest grows more. Best to pay now than more money later.  

Answer 21

if you have the money pay it off,  

Answer 22

Pay your car off and save yourself money on interest you'd otherwise be paying to the bank.  That's a no brainer

Answer 23

put half in a icier account for how ever long you want and with the other half pay some off the car debt.  

Answer 24

I would add more to savings just in case and continue with the loan until savings are more than what you owe on the car. You never know what could happen that you would need the money in savings to live on. What good would it be if you owned a car and were broke and unable to work?

If you wanted, you could refinance the car for a lower interest rate and save money on the loan.

Answer 25

Why keep that monthly bill?  And no matter how low the interest your still paying more in the long run.  

Answer 26

Depending if saving rate is is higher than car rate. if yes? then no do not pay off the car because u will lose precious interest on the savings. But if your car is interest rate is more than the savings. pay off a portion of your car and keep enough in savings that will be able to carry you 6 - 8 - 12 months (depending on your field and local economy volatility)

Answer 27

Pay off the Car if you have the cash!

You can start saving after that!

Answer 28

Well, let's see.

Are you making more than 6.5% on your savings account?

If you'd make more by investing, then invest it for a while and then you'll have interest and principle.

But if the interest on your loan is going to keep building and you'll just owe more the longer you have it, pay it off.

Pay off the highest interest stuff first.

Or, go for a diversified solution--make some extra payments several months while you keep your savings in a high-yield account or invest it in a relatively safe way.  But put the money where it will do the most good.  Also, the sooner you pay off your car, the less likely you'll be stuck "upside down" on the payments (where you owe more on the loan than you'd get for selling the car.)  Cars have a tricky way of losing a whole lot of value due to breakdowns or wrecks, and if you plan to resell it, you'd do better to pay it all off now while you have a chance to sell it for a good price.

I take that back about investing the money.  Pay it off.  Cars are too risky to keep paying on.  It's not that much and you can save some money later.  Pay it off now.  At least make some extra payments and get ahead.

Answer 29

If you can invest the 11K in something that would earn MORE than 6.5% interest, then you should do that. If not, pay off the car and reduce your insurance!

Answer 30

I would pay it off, because if you are on lease or financing you are paying more than what the car is actually worth. I would pay it off, but its totally up to you. Its your money.

Good luck

Answer 31

You could, but put it into this perspective.

You have to pay off the interest off anyways finishing up now or prolonging it to the last statement.  The interest is you paying the bank to not pay the whole thing altogether.

So my suggestion is to pay the statement in full when it comes and put the rest of the extra cash into savings for a potential rainy day fund.