Should I pay off a loan early if it's at 2.59% for 60 months?

"I want to build credit while also buying a new car. I found a car I like for $20,000, and I got approved for a 2.59% loan for 60 months.

I have the cash on hand to buy the car, but I thought I could keep this money and invest it while I pay the loan. Is this a good move? Or should I pay the loan off early?"

“You seem to have the right idea. With that low of an interest rate, you should probably hold on to the $20,000 and invest it in something else.
As long as you can make more than 2.59% on your investment, you’re coming out ahead. So make a smart move with the $20,000 and pay the loan off as you normally would.
If you need to lower your debt for another reason (such as a home purchase), you can always pay off the loan in advance.”
Eric Schad
Answered on Jun 03, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

Did this answer help you?

Ask us a question by email and we will respond within a few days.

Have a different question?

You can meet us at our office and discuss the details of your question.

Read advice from car experts at Jerry

Easiest way to compare and buy car insurance

No long forms
No spam or unwanted phone calls
Quotes from top insurance companies
Find insurance savings — it's 100% free