I used to think paying off my car early was dumb until I ran the numbers

I was at a diner in Detroit last month looking at my loan paperwork and realized I was paying $4,200 in interest over 4 years. I did a quick amortization calc on my phone and saw paying an extra $100 a month would save me $1,800 total. Anyone else have that moment where the math smacked them in the face?

2 comments

2 Comments

nora5419d ago

My uncle put extra toward his truck loan for 2 years and then lost his job... that $1,800 he saved in interest didn't help when he had to sell the truck for less than he owed.

jordan_webb4919d ago

Did he actually save $1,800 or did the bank just tell him that? Money you put toward a loan you can't get back when things go sideways. That's the real problem with paying extra on a car or truck - you're just locking up cash in a depreciating hunk of metal. Better to keep that money in savings and only pay extra if you've already got a fat emergency fund sitting there.