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.

  • Spike_Spiegel@alien.topB
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    1 year ago

    I’d overpay my monthly payments. That way you’re still cutting deep into the interest and you have the money for whatever might come up.

    Like pay 1400/month for 24 months.

    • admiraltarkin@alien.topB
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      1 year ago

      That’s what we did with my wife’s Defender. Bought it in September 2020 on a 5 year loan, paid it off in November 2020 because I didn’t feel like paying interest