Type-R Paid off 7 months.

Warchildvet

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Morning everyone,

Seeing my original post here, I got my Type - R in October last year. https://www.civicx.com/forum/threads/introduction-of-members.12115/post-911604.

It was for a 2018 with about 1600 miles on it used. With my neg equity I owed around 45K for the vehicle. Like others on this forum some don't mind payments and some do which is me. I decided to burn this loan down quickly as this is one of the few cars I have owned that I don't mind keeping for long haul.
I bring this up to say that if you feel the car is worth it to you pay it off and get it off your chest so you can truly enjoy it. I traded in my BMW X3 for it and I don't regret it at all especially owing it out right now. I wish you all the best with owning that title in hand and don't fall into the never ending cycle of something newer, if you enjoy it, own it, and appreciate not having a payment.

-T
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Warchildvet

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some people keep loans alive because car loans tends to be one of the cheaper loans you can get and they will use that money to invest in something that gives higher returns.

with that said, mines been paid off for years now lol.

great to hear boosted! correct, can get higher rates of return through investing which I do heavily and have a large portfolio, but if you have additional income it's best to pay off debt if you can. There is no better feeling than to just not have a payment at all.
 

Byron Sexton

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Man I would feel good not having a payment to worry about . that's more money you can use to invest in something else. Congrats on crushing that payment. Get that debt off your back
 


1lastnerve

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OP - Good for you! Keep working to payoff everything that you may have debt on.
The line that people keep telling themselves... " use that money elsewhere." Is only valid if you have enough cash to pay for everything you own, and have it invested in mutual funds building wealth. Otherwise, that's just another way of saying I need the money to support all the other bills I have.
 

boosted180sx

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great to hear boosted! correct, can get higher rates of return through investing which I do heavily and have a large portfolio, but if you have additional income it's best to pay off debt if you can. There is no better feeling than to just not have a payment at all.
i agree. thats why i decided to just pay it all off.
i dont owe anything and its a great feeling.

could i have invested the money instead? sure. I just like not having payments lol.
 

jrow3

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At less than 2% interest, I think I'll keep my payment and use that money elsewhere. You do you though.
Assuming 5 year loan term, sounds like you missed out on about $3700-$6500 bucks, depending on investment earnings (assuming a conservative 5-7% ror).

Not to say that is "wrong" as managing your finances is your business. For some "wasting" 4-7k bucks may actually very well be a savings as these numbers assume you're diligent about actually investing, and not touching that cash for anything. If you "borrow" some of that cash, or the stock market performs poorly then you're not making that difference up, so it's not 100% risk free.

However I wanted to throw some numbers out there so people who may not be super understanding of finances understand just how big a gap 3-5% interest on 45k over 5 years really is.

Honda Civic 10th gen Type-R Paid off 7 months. 1619627077521

Assumptions: 60 month loan term at 2.0% interest. $6500 a month put into investments only for the first 7 months (nothing after that), with a 7% average earning interest. Left shows balance on car loan, while right shows balance of investment account making your 788 payment each month from that balance.
 
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dwag0588

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Assuming 5 year loan term, sounds like you missed out on about $3700-$6500 bucks, depending on investment earnings (assuming a conservative 5-7% ror).

Not to say that is "wrong" as managing your finances is your business. For some "wasting" 4-7k bucks may actually very well be a savings as these numbers assume you're diligent about actually investing, and not touching that cash for anything. If you "borrow" some of that cash, or the stock market performs poorly then you're not making that difference up, so it's not 100% risk free.

However I wanted to throw some numbers out there so people who may not be super understanding of finances understand just how big a gap 3-5% interest on 45k over 5 years really is.

1619627077521.png

Assumptions: 60 month loan term at 2.0% interest. $6500 a month put into investments only for the first 7 months (nothing after that), with a 7% average earning interest. Left shows balance on car loan, while right shows balance of investment account making your 788 payment each month from that balance.
Good numbers, but this is neglecting that most people should be putting the extra income into tax advantaged retirement accounts. Paying the note off sooner would mean diverting more income away from those tax advantaged accounts to pay the car note down faster. Doesn't make sense.
 

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I applaud your discipline and financial strength. I am personally a fan of leveraging low interest loans and keeping my cash for how flipping. I also understand there are more than one ways to skin a cat... and my risk tolerance may not be what the next guy’s is.
 

jrow3

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Good numbers, but this is neglecting that most people should be putting the extra income into tax advantaged retirement accounts. Paying the note off sooner would mean diverting more income away from those tax advantaged accounts to pay the car note down faster. Doesn't make sense.
We're now getting into a discussion better suited for personal finances forum, but yes, there are even better ways to leverage the extra income, I'm simply illustrating to simplest and most comparable option. But yes, if you are able to to divert that income for 20-30 years you can make even more. I'm assuming you want to divert that money to an account on comparable 5 year timelines and then later have those funds available.
 

Tev42

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love how these posts always turn into people being financial advisors.
I get where the sentiment comes from, generating returns that outpace your car loan interest rate is a solid move, and people want to share that approach, but some people like being debt free. All comes down to what fits each person’s mentality.

Pay a loan off early = great
Pay loan for 5yrs and invest spare cash = great

Neither option is a loss
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