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Old 03-26-2019, 11:29 AM
rounderman rounderman is offline
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Location: Rochester, NY
 
Join Date: Apr 2016
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Mein Auto: 2019 X2 M35
typically there is no penalty for early payoff so what you save is future interest rates . Mr. Autoputzer is also right, stuff happens so keeping a cash reserve is one of those sleep aids. 2.9% is not awful. my personal choice being the conservative investor that I am, is to not pay off the loan right away. 50K in the bank sounds like a lot but do the math on what you spend each month if you have 3+ months of spending in the bank that is a good starting point for a safety net. How hard would it be to find a job if your current one craters (it happens to pretty much everyone, last time it took me 9 months to find a new one and I have mad skills )

so again I offer a middle ground. Put extra money in every loan payment, ideally double the payment or put next months principal payment in or an extra 100 per payment. whatever you can handle. Effectively you are earning 2.9% on any extra money you put in (not paying interest on the extra payment). It adds up fast while still giving you some flexibility if the need arises plus you will shorten the time you are paying off the loan. I do that with all my loans including mortgage when I had one and car loans. If you are handy with a spreadsheet it is pretty easy to run the numbers so to speak. Simple calculation you pay a months interest each month on the unpaid balance of the loan (2.9%*balance/12 close enough) subtract that from the loan payment and the remainder is principal payment. You can run this out each month and see the impact on loan length and total interest paid.

my 2 cents
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