Car Loan
Hello Terry,
We recently purchased a new car. My husband, age 61, who was and still is the main bread winner in the family has recently retired. We put 5,000 down and financed 39,000 @6.7% for 72 months. Our car payment would be 670.00 monthly. There will not be a penalty for paying off the loan early. We have 100,000 in our savings that makes 3% interest. We also both have a good amount invested in CD’s, Stocks and a Growth IRA. Am I correct in thinking that it would make more sense to just use our savings and pay the vehicle off and not have those monthly car payments?
We initially decided to go with financing because they gave us a better deal on the purchase price.
Terry Says
They gave you a better deal on the purchase price because they could rip you off and make money on the financing! There is no free lunch. Yes, pay it off. But know that you likely paid “upfront” fees on the loan that offset that “good deal” on the price of the car!
Next time negotiate for cash. And negotiate with at least two dealers. And get all the costs when you negotiate — including documentation fees and sales taxes. Ask what amount of check you’d have to write to buy the car. Do that at two dealerships. Only then, make your purchase.
