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| Topic | Do I lose money if I take a 60 month loan and pay it off fast vs a shorter loan? |
| Sariana21 04/05/18 7:33:23 PM #3: | First, make sure there is no "prepayment penalty." Some loans have terms that do not allow you to pay them off early. Second, what do you plan to do with the money not going toward a monthly payment? If you can invest the extra and get a good return on it, you're better off with a longer loan paid off over its normal life (so 60 months in your example). That is, instead of paying $150 on a $100 monthly payment (for example), pay the regular $100 payment and invest the $50 elsewhere (not a savings account). Third, there usually is little value to paying off a car loan early because a car depreciates considerably the moment you drive it off the lot. This is in contrast to a house, which tends to appreciate in value over time. So paying it off early gets you more equity. Not so with a car. So your question actually is very dependent on the goods being financed. --- ___ Sari, Mom to DS (07/04) and DD (01/08) ... Copied to Clipboard! |
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