Is it better to pay off as much of my car as possible at once to reduce interest, or to keep making payments to build my credit score? The car is already purchased, and I have some extra money from my job and having no friends or aspirations.
Unless your interest rate is huge, you're better off to accept the debt and put the extra payments you would have made into growing investments.
>>1174534
I know nothing about investing. Is it too late to start?
>>1174534
Also the interest rate is 3.5% APR. I don't know if that's high.
Pay it off. Don't carry debt on depreciating assets unless you have to.
>>1174542
This. A car is not an investment, it depreciates massively from the day you drive it off the lot. There are advantages to financing a car in that it lets you retain more liquid assets for what can be a relatively small fee(the interest).
However, you should try to remove the debt as quick and responsibly as you can. I just bought myself a new car two months ago and elected to finance ~$19k even though I could have paid cash for it. The reason being that leaving $5k in cash isn't something I'm comfortable with, and I don't want to sell stock. So I opted to make a large down payment, avoid paying for GAP insurance, and then making larger payments on the principal. If I take the full 4 years to pay it off it will cost me ~$1500 in interest, which I feel is worth the comfort of keeping myself more liquid at the moment. In likelihood, I'll pay it off in 2 years, however.
>>1174553
Depends on the length of his loan too. For a 6 year that'd be high. For a 4 year it's decent. For a 2 year it'd be pretty low.
>>1174553
It was a used from Carmax. 15k for a 2013 car in 2015, barely driven.
I don't have an investment in mind. `~`
Carrying a balance on a card does not build credit faster.
You are just paying unnecessary interest
>>1174534
This is bad advice
Cars are depreciating assets and are classified as consumer debt
Leveraging consumer debt is just stupid and a net loss over time
>>1174586
For how long is it 0%?
How much did you finance?
Do you have GAP insurance?
Remember, it's still a depreciating asset and can be destroyed very easily. What if you owed $30k on it when it was worth $20k and it got totaled?
I'd still pay it off as quickly and responsibly as you can.
>>1174563
http://blog.penfed.org/3-reasons-not-to-pay-off-your-car-early/
OP, I would recommend putting the extra cash in investments. There are plenty of ETFs that yield over 3.5% which means you'll make more money that you'll pay in interest. You're not paying that much relative to other interest rates that can go much higher (Some places have +20%).
>>1174549
Sorry but this guy doesn't know what he's doing. GAP insurance will cover you if there is a difference between what you owe and what the car is worth in the case of a total loss. It's not a bad idea but it's not necessary. NEVER make any large down payment at the dealership. Those guys like to mark up everything and you'll lose money without even knowing it. Trust me on this. Get financing THEN make the down payment if that's your plan. They'll try to bullshit you though.
>source: I work for an auto finance company.
>>1174586
Don't pay it off early. It's free money.
As Far as the credit score is concerned. Full payments for 6 months. Then cut it as quickly to major holding points of 50% 10% 1%. Once you get to 1% hold it there as long as possible.
>>1174591
>Remember, it's still a depreciating asset and can be destroyed very easily. What if you owed $30k on it when it was worth $20k and it got totaled?
At 0% interest and no GAP insurance, why would that make a difference? Either way, you lose a car which you paid x amount of money for.
>>1175013
The only acceptable answer is zero interest. Even then you're not gaining anything of value aside from a few credit score points.
Who in their right mind would take out a car loan with precomputed interest and early payoff penalties?
>>1175129
GAAP covers the 10k difference, but can run you an extra 100/month. So in the scenario, you would be out 10k
