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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?"
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“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.”
View full answer
- Gregory R.
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