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Discussion Starter · #1 ·
I have the opportunity to payoff my 01 325i with 38k miles and get out of $500 car payments. I owe 17k on the car, It would be sweet to not have the monthly car payment.

Do you think depreciation would be too much to be worth it? suggestions please.

TIA
 

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E46-free since 10-13-06
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What does depreciation have to do with it?

You have to pay back the money regardless. By paying early you will save money on interest.
 

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Yes

Yes, pay it off. Well, unless you can invest your cash in something that will earn higher interest than what you are currently paying on your loan?
 

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Discussion Starter · #4 ·
my thinking is - If I do pay the 17k and a year down the road the car is only worth say 15k, then I wouldn't think it'd be a good investment ...
 

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E46erfan said:
my thinking is - If I do pay the 17k and a year down the road the car is only worth say 15k, then I wouldn't think it'd be a good investment ...
Your not making any sense bro... depreciation has NOTHING to do with it.... Youd only get back $$ from a car sale of what its worths + what you put into it anyways...

You could rack up 2 grand in interest spread out over years anyways....

The only thing you should consider is putting the 17 grand into an investment rather then pay off you car.... but I would (and did) pay my car off in full.
 

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Can't you refinance paying off a large chunk of it, and make the payments alot lower? I'm not money savvy.. the wife handles that, I just make and soend it :)
 

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Dont pay it off..simply not worth it unless you plan on buying it and selling it for a profit from the 17k but about how much more youve already put into...a lease is the smarter way typically and you get a new car every couple of years..
 

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BGReddy00 said:
Dont pay it off..simply not worth it unless you plan on buying it and selling it for a profit from the 17k but about how much more youve already put into...a lease is the smarter way typically and you get a new car every couple of years..
I think leases are as pointless as renting...
 

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There is no reason to pay your car off early unless you can make more money by investing the payoff money in something that will return MORE than the interest rate on your loan. Example:

You car interest rate is 6% for another 3 years. You have the opportunity to invest your 17K into something that will make you 10% over the next 3 years. You DON'T payoff your car and invest the money. After three years, you are ahead of the game 4%. If you DO payoff the car, you forfeit the 4%. Now, life isn't as cut and dry as that, but generally, if you have a HIGH interest car loan, you want to pay it off earlier to minimize the amount you spend on interest charges.

Now for me, I have a 2.9% loan for 5 years. It makes almost no sense for me to payoff early because I am paying less than $2000 for the life of the loan to finance the car. I can easily find better things to invest my $400.12 a month into. :)
 

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Discussion Starter · #11 ·
okay - I'm confused ...

my interest rate is at 6.4% so I wouldn't be saving that much $$ by paying off the note early.

However, If I paid it off, I would own a vehicle that is worth considerable more than the payoff, and I have $500/month to invest or save ...
 

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E46-free since 10-13-06
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E46erfan said:
okay - I'm confused ...

my interest rate is at 6.4% so I wouldn't be saving that much $$ by paying off the note early.

However, If I paid it off, I would own a vehicle that is worth considerable more than the payoff, and I have $500/month to invest or save ...
You'll save over $1000 in the long run by paying off early if you owe $17,000 at 6.4% right now. That's if you plan to keep the car until it's paid off.

Depreciation doesn't factor into it at all - if you owe 17k you have to pay it all back eventually one way or another, regardless of what the car is worth at any given time.
 

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slow323ci said:
You'll save over $1000 in the long run by paying off early if you owe $17,000 at 6.4% right now. That's if you plan to keep the car until it's paid off.

Depreciation doesn't factor into it at all - if you owe 17k you have to pay it all back eventually one way or another, regardless of what the car is worth at any given time.

:werd:
 

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dbtheo said:
I agree with slow323, pay it off, if there is no need to carry debt, don't.
It's not always as simple as that. A car loan isn't really "bad" debt. If there is something BETTER he can do with the 17K now or before the car is paid off, then he should do that. If the 17K is just going to be lying around for 3 years gaining a minimal amount of interest, then yes, pay the car off. I personally would not pay it off as I could find something better to invest 17K into. Real Estate, stocks, mutual funds, etc... Ultimatly, it's your money dude. If paying off the car makes you feel better, than do it. Some people hate to be in any kind of debt, and that is good too :)
 

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Try to refinance and get a lower rate, maybe pay part of it down, let's say 7k. This will lower the payment, and then invest the 10k, maybe put it in a CD or something. The car will only loose value, and chances are, you will not keep it more than 4 or 5 years. Seems like you could make more money somewhere else than you are loosing in paid interest. :dunno:


Steve
 

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Do you have other money saved up for emergencies? That's something you should think of. What about other high interest debts such as credit cards? Try paying those off if the interest is higher. Or else send me the money :craig:
 

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djsway said:
Do you have other money saved up for emergencies? That's something you should think of. What about other high interest debts such as credit cards? Try paying those off if the interest is higher. Or else send me the money :craig:
This would be a smarter choice. (Paying off high interest debt, not sending him the money. Sorry djsway.)
 
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