Hello, Friend got a new truck. Price of truck OTD = $45k Down payment at time of finance = $2k ($43k financed) Interest = 6.9% Total for 75 months = $55.5k roughly which means it’s about $10k of ONLY interest. Payment = $710/month
Correct me if I’m wrong but in theory this truck can be paid off tomorrow and my friend pays none of the $10k interest, right? Anyway, my friend has a check that he wants to use of about $23k. My question is: is it better to put the $23k towards the auto loan right now (ensuring that the money goes towards the principal) or is there a better alternative like placing the money in a HYSA and earn about a 5% interest (I know it can fluctuate) and use that account to pay off the debt gradually? He’d be paying a lot more than the minimum monthly as well. I guess the only upside to this is though is having more cash liquid if ever needed.
Correct me if I’m wrong but isn’t a an auto loan a loan that retains interest payments on the original loan amount. I would head to a credit union or something and tell them his situation. He can probably get a lower % plus put that 23k towards the loan then. Meaning he’d finance 20k at that point meaning the interest paid on that loan would be based on 20k not 43k. Not gonna grill the guy because I did the same thing. Got a 39k truck finance 32k. Next month I sent 15k stupid idea but yeah. This was also on 1.9% interest.