Hello, Friend got a new truck. Price of truck OTD = $45k Down payment at time of finance = $2k ($43k financed) Interest = 6.9% Total for 75 months = $55.5k roughly which means it’s about $10k of ONLY interest. Payment = $710/month
Correct me if I’m wrong but in theory this truck can be paid off tomorrow and my friend pays none of the $10k interest, right? Anyway, my friend has a check that he wants to use of about $23k. My question is: is it better to put the $23k towards the auto loan right now (ensuring that the money goes towards the principal) or is there a better alternative like placing the money in a HYSA and earn about a 5% interest (I know it can fluctuate) and use that account to pay off the debt gradually? He’d be paying a lot more than the minimum monthly as well. I guess the only upside to this is though is having more cash liquid if ever needed.
Pay the $23k towards the Principal, Hold the loan for 6 months to boost your credit score, i was able to do this and added 30points total to my score, my mistake was keeping the loan balance too low that they closed the account after 4-5months. So if you can, calculate the monthly payments good for 6 months, that gives out the best result for your credit score and total interest paid. Keep as minimal principal balance as you can that’s good for 6 months loan life