I got my car (2020 Ford Fusion Hybrid SE) new 3 years ago at $25k for a 6 year loan @ 0% interest for entirety of loan, $350 a month payment. I’m about halfway paid off and have about $12.5k left on it. What should I do? I just get sick of paying $350 a month.
If you have the means to pay it off early, I would. It is worse for your credit score, but you will feel great not having that payment hanging around your neck. I can practically guarantee that you won’t regret not having to make that payment each month.
https://www.treasurydirect.gov/savings-bonds/i-bonds/
Put 10k here. Make a free $1200 over those three years.
High yield savings accounts are over 4% but their rates fluctuate. I put money in at Ally a few months ago when they were near 3%.
It’s a nice way to park some cash that is easy to get in an emergency.
It’s never a good idea to try and screw somebody over that’s given you a good deal, not that I’m saying that’s your intent; however, that being said, I would pay the loan and not take advantage of it, just to be safe. It’s good for your credit score, it’ll erase debt, and you don’t know what could happen in the next few years. Medical accident, have a kid, get married, can’t work, get paid off, something, anything that can happen to somebody. You wouldn’t want some $12.5 grand just hanging around in debt. No matter what, that’ll have to be paid off some way, some how. Better to get it out of the way in my book, especially if you can right now. If you have a financial planner or fiduciary I’d talk to them too for questions like this. Not degenerates like me. Hope that’ helps. Not trying to scare you, but I don’t ef with debt.
Setting aside the talk about interest, etc., I would double check the terms of your loan.
Almost no lending institution is going to give you $25k at 0% for the life of the loan. They wouldn’t be making any money. In fact, servicing the loan (taking payments, etc.) would cost them money.
Are you sure it’s for the life of the loan?
Car loans are very frequently extremely low interest rates when financed through the dealership. I personally have a 0.99% car loan.
The days of the 0% for X months financing are coming rapidly to an end as inflation and the federal reserve interest rate both go up. But even those loans, while they incentivize the buyer to pay the loan off early, will still apply interesting – sometimes, if you’re not careful, all the deferred interest for the past X months, which is extra shitty – after the 0% period is complete. I think the only major manufacturer this season that’s offering any sort of 0% deal is NIssan, and they’re sort of going all in, probably in an attempt to move excess inventory.
It’s just not a thing to see a lender not charge interest. It’s like, going to Taco Bell and ordering a burrito for $0.
There are, of course, some exceptions. The dealer may be subsidizing the interest payments. The lender/servicer may be pulling some (probably) illegal shit and calling “interest” a “service fee” or are perhaps charging a “payment processing convenience fee” to make their money. The dealer / automaker may be paying the servicer’s bills on the backend, but don’t think for a moment that cost isn’t baked into the sale price of the vehicle. I just can’t see a case where a lender would be okay working for free.
Pay it off and start paying yourself $350 a month.
