Better to pay off a vehicle or leave the $ in savings?

[akwifeandmomma]

In these shaky economic times, is it better to pay off a vehicle loan if possible, or to leave that $ in savings?

The note is at 6.5%, fwiw, bought last year on a 6 year loan, little less than 5 years left to pay.

This is our only loan / debt besides our mortgage.

[robertandenith]

I have to be honest, but i would pay off the car. We have 2 cars, one is paid off and the other one is not. I am so glad we only pay for one car and I can't wait to own the other one. Not having a monthly payment of a car is such a great saving as it is. You will get that money (your savings) back pretty fast and even put it back in your savings. My :

[justamama]

I would pay the car off.

[mamamelia]

i would pay the car off too. get rid of as much as debt as you can. how much interest are you earning on your savings and how much interest are you paying on your car loan? that calculation alone should lead you in the right direction. goodluck mama!

[llamalluv]

It depends on how shaky YOUR economy is. Where I'm sitting, I would pay it off. Other women have posted about impending or expected layoffs, and I would never recommend spending down cash in that situation.

[slsurface]

I am happy to say I am three payments away from paying our car off two years early. I can't wait to be done with the payments! Then it means extra $$ I can put in savings once I'm done with payments!

[EmsMom]

I think that I would split things down the middle. I personally feel more secure with some money in savings. If times were very bad and they repossessed my car, I could live with that. However, I would also absolutely prefer to save $ on finance charges. So I would first try to knock down the budget and find some extra money to pay down the car ASAP. If that included taking some extra money from savings, I could live with that. I might also try to refinance the car for a lower interest rate. If I was in a very secure job situation, I might use more of the savings to pay down the loan, especially if there was still some left (and then, of course, I would take the entire car loan payment and put it towards savings.)

[Mulvah]

I think it depends on your situation, in general.

From where I am, I would pay off the car. I would probably keep a small buffer in savings, but I would pay off the car note. You are not going to earn 6.5% interest in a savings account, so you are losing money by keeping it in savings and not paying off the car.

(Again, that is just my opinion based upon where I am. I am not sure where you are, otherwise, financially.)

[sweetjasmine]

I would pay off the car. I was surprised to learn recently that we have 3 years left on our car loan. I thought there were only 2 years left. Shame on me, must have slipped my mind! I have started to pay double each month to get it paid off in 1 1/2 years. Hopefully, we can keep that up, then after that we will finally be debt free.

[*MamaJen*]

Keep a savings buffer, but start paying down the debt.

[Caneel]

Shoud you decide to pay off the car, make sure your actually get the benefit of interest savings.

Some installment loans are set for a certain amount of interest and principle each month with no benefit to the consumer if they pay it off early. The banks do it this way so they get their money in the event of pre-payment or early payoff.

If you don't get any benefit, don't pay it off early.

Not all car loans are like this but I saw some in my banking career.

[shelbean91]

Pay the car off and then put your monthly car payment back into savings.