Payment or no?

SonicGerm · 04-05-2009, 08:48 PM

So I have $23,000 in my savings I owe about 11k on my car 4.9 APR payments are about $435 a month. My question is who things I should just pay off the car and pocket the $435 a month to build back up my savings. My savings account APR is only 1.2%.

Advice?

I'm in the army so I get paid every month regardless.

Dwill335i · 04-05-2009, 09:13 PM

It's going to take about 2 1/2 years just to get your savings account back up to where it is now, assuming that you are religious about putting $435 a month, every month, back into your savings, and don't spend the money on anything else.

I wouldn't.

BMWalltheway · 04-05-2009, 09:25 PM

Pay it off. You are paying 4.9% on the loan versus getting about 1.2% from your savings. So you are currently losing money. Its simple math. Unless you need the money for something in the next two years, I would suggest paying off the car. Since you are in the army you are guaranteed an income, so I would say build up your savings once again.

vindicator · 04-05-2009, 10:16 PM

If it were me, I'd keep the money in the bank! Try to offset it by collecting interest. Cash IS KING! Can you refianace the 11k elsewhere? Or are you fixed into the 4.9%?

MontegoGoGoGo · 04-05-2009, 10:26 PM

Pay it off!

bulldog_yyc · 04-05-2009, 10:26 PM

Quote:

Originally Posted by BMWalltheway

Pay it off. You are paying 4.9% on the loan versus getting about 1.2% from your savings. So you are currently losing money. Its simple math. Unless you need the money for something in the next two years, I would suggest paying off the car. Since you are in the army you are guaranteed an income, so I would say build up your savings once again.

yep - pay it off

yavuz · 04-05-2009, 11:01 PM

not a smart time to blow off savings. id rather keep up with payments till i see the light in the tunnel with the economy today.

Tschuss · 04-05-2009, 11:16 PM

Keep the loan, shop for other safe investments. You are losing money at 1.2%

-B

addy85 · 04-05-2009, 11:26 PM

keep your money

Sara · 04-05-2009, 11:28 PM

I'd pay it off. One less bill.

daniel3ooo · 04-05-2009, 11:32 PM

id keep the money and try your luck in investing in the market long term...i'm assuming $435 a month isn't much to you

I'm in the same boat as you. I'm looking to purchase a 335 and have enough to buy one for $30k or so with cash but I'd rather down about 20 and finance the rest so I can continue trading in the stock market

DenverJayhawk · 04-05-2009, 11:35 PM

This is a common question. The answer is pay it off unless you can find another investment that will return a higher yield than your current APR. Given the current market, pretty much money market accounts are the only guaranteed investment and seeing how most of these yield about 2% at the most, now is the best time to lower your debt.

MrClean · 04-05-2009, 11:53 PM

Quote:

Originally Posted by BMWalltheway

Pay it off. You are paying 4.9% on the loan versus getting about 1.2% from your savings. So you are currently losing money. Its simple math. Unless you need the money for something in the next two years, I would suggest paying off the car. Since you are in the army you are guaranteed an income, so I would say build up your savings once again.

It depends where you are in the life of the loan. At the beginning, the interest payments account for more of your payment (the banks like to get their money up front), but the longer you're in, the more of the payment is applied to the principal. At some point, it makes sense to just keep paying the loan. If you're over half-way through your loan term, that might be the case...

J

E90RYANJB · 04-06-2009, 12:03 AM

pay it off.

BK · 04-06-2009, 12:19 AM

Quote:

Originally Posted by DenverJayhawk

This is a common question. The answer is pay it off unless you can find another investment that will return a higher yield than your current APR. Given the current market, pretty much money market accounts are the only guaranteed investment and seeing how most of these yield about 2% at the most, now is the best time to lower your debt.

+1 You pay it off, you've made (saved) 4.9% on that money. That's not bad for a guaranteed return. If you have any debts with a higher interest rate (credit cards, personal loans), pay them off first.

galahad05 · 04-06-2009, 12:33 AM

With a guaranteed income, I'd pay it off in a heartbeat.

iheartsole · 04-06-2009, 01:00 AM

i would keep the money as well. not a very smart move to blow off 11k to pay off a lease car. especially with the economy today. you should keep that money for backup/reserve.

Houman21 · 04-06-2009, 01:25 AM

Normally I would say pay it off - but with the current economic tide, and the uncertainty of what's next, I say keep your money as a just incase insurance policy.

galahad05 · 04-06-2009, 01:28 AM

Quote:

Originally Posted by iheartsole

i would keep the money as well. not a very smart move to blow off 11k to pay off a lease car. especially with the economy today. you should keep that money for backup/reserve.

Not a lease.

Quote:

Originally Posted by Houman21

Normally I would say pay it off - but with the current economic tide, and the uncertainty of what's next, I say keep your money as a just incase insurance policy.

Has a government job (military)--economy doesn't factor.

KkSc · 04-06-2009, 01:35 AM

i would say yes!

ShinyRedCar · 04-06-2009, 03:17 AM

I voted yes but...and this is a BIG 'but'...you have to be strong enough to put that $435 away each month. The problem with that thinking is that things come up like...life, you know?

radix · 04-06-2009, 03:26 AM

Considering your car is a 2008 335xi, and you only owe 11k on it you've already paid off most of the interest. You are also not upside-down on the car, so the car can be considered an asset as it's value far exceeds the debt owed on it. Taking these factors into consideration, and the fact that you will make more interest on the savings you have (i.e. using CDs or a HYMM), I'd hold on to the money and pay the debt down as you are now.

The best advice I can give is to find a savings account that offers a better rate, or use CDs if you don't mind you money being tied up for a while.

View Poll Results: Should I pay off my car?
Yes	71	67.62%
No	34	32.38%
Voters: 105. You may not vote on this poll

04-05-2009, 08:48 PM	#1
SonicGerm Master Shake 20 Rep 177 Posts Drives: 2016 BMW X1 Join Date: Apr 2008 Location: Colorado iTrader: (0)	Payment or no? So I have $23,000 in my savings I owe about 11k on my car 4.9 APR payments are about $435 a month. My question is who things I should just pay off the car and pocket the $435 a month to build back up my savings. My savings account APR is only 1.2%. Advice? I'm in the army so I get paid every month regardless.
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04-05-2009, 09:13 PM	#2
Dwill335i Second Lieutenant 2 Rep 238 Posts Drives: 2012 535i White/Beige Join Date: Mar 2009 Location: FL, USA iTrader: (0)	It's going to take about 2 1/2 years just to get your savings account back up to where it is now, assuming that you are religious about putting $435 a month, every month, back into your savings, and don't spend the money on anything else. I wouldn't. __________________ 2012 F10 Alpine White/Venetian Beige ZPP/ZTP/Sat Radio (previous 09 335i E92)
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04-05-2009, 09:25 PM	#3
BMWalltheway Second Lieutenant 54 Rep 295 Posts Drives: 2017 440xi GC AW/CR Join Date: Jan 2008 Location: Chicago, IL iTrader: (0)	Pay it off. You are paying 4.9% on the loan versus getting about 1.2% from your savings. So you are currently losing money. Its simple math. Unless you need the money for something in the next two years, I would suggest paying off the car. Since you are in the army you are guaranteed an income, so I would say build up your savings once again.
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04-05-2009, 10:16 PM	#4
vindicator balllllllllin 20 Rep 173 Posts Drives: 2009 335i xDrive Join Date: Jun 2008 Location: MI iTrader: (0)	If it were me, I'd keep the money in the bank! Try to offset it by collecting interest. Cash IS KING! Can you refianace the 11k elsewhere? Or are you fixed into the 4.9%? __________________
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04-05-2009, 10:26 PM	#5
MontegoGoGoGo I'm kind of a bitch 377 Rep 895 Posts Drives: Montego/Cream E93 Join Date: Jan 2009 Location: St. Louis & St. Petersburg iTrader: (0) Garage List 2007 E93 [0.00]	Pay it off!
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04-05-2009, 11:01 PM	#7
yavuz Staff General 9 Rep 158 Posts Drives: 09 E92 335xi, f10 m5 Join Date: Jan 2009 Location: North NJ iTrader: (1)	not a smart time to blow off savings. id rather keep up with payments till i see the light in the tunnel with the economy today.
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04-05-2009, 11:16 PM	#8
Tschuss Private 3 Rep 92 Posts Drives: 2007 BMW 335i Coupe Join Date: Sep 2008 Location: Out West iTrader: (0)	Keep the loan, shop for other safe investments. You are losing money at 1.2% -B
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04-05-2009, 11:26 PM	#9
addy85 Got beef? 141 Rep 3,646 Posts Drives: E90 335i Join Date: Oct 2007 Location: Arlington Texas iTrader: (4) Garage List 2007 335i [0.00]	keep your money __________________ Special Thanks to AU335
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04-05-2009, 11:28 PM	#10
Sara Lieutenant General 5824 Rep 17,879 Posts Drives: A car Join Date: Aug 2007 Location: Nola iTrader: (6)	I'd pay it off. One less bill.
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04-05-2009, 11:32 PM	#11
daniel3ooo Private First Class 11 Rep 168 Posts Drives: 07 E92 335i BSM Join Date: Jan 2007 Location: USA iTrader: (0)	id keep the money and try your luck in investing in the market long term...i'm assuming $435 a month isn't much to you I'm in the same boat as you. I'm looking to purchase a 335 and have enough to buy one for $30k or so with cash but I'd rather down about 20 and finance the rest so I can continue trading in the stock market
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04-05-2009, 11:35 PM	#12
DenverJayhawk Major 72 Rep 1,217 Posts Drives: 2006 E90 330i Join Date: Jul 2008 Location: Denver iTrader: (0)	This is a common question. The answer is pay it off unless you can find another investment that will return a higher yield than your current APR. Given the current market, pretty much money market accounts are the only guaranteed investment and seeing how most of these yield about 2% at the most, now is the best time to lower your debt. __________________ 330i, Black Sapphire, 6MT, Sport, Active Steering, Flux Capacitor
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04-06-2009, 12:03 AM	#14
E90RYANJB ............ 31 Rep 1,025 Posts Drives: E90 Join Date: Feb 2009 Location: CA iTrader: (6)	pay it off.
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04-06-2009, 12:33 AM	#16
galahad05 Brigadier General 158 Rep 3,158 Posts Drives: '07 335i e90 Join Date: Mar 2008 Location: Long Island NY iTrader: (0)	With a guaranteed income, I'd pay it off in a heartbeat. __________________ Always do right. This will gratify some people and astonish the rest. --Mark Twain
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04-06-2009, 01:00 AM	#17
iheartsole Brigadier General 85 Rep 4,929 Posts Drives: 08 335i coupe Join Date: Apr 2007 Location: San Diego iTrader: (2)	i would keep the money as well. not a very smart move to blow off 11k to pay off a lease car. especially with the economy today. you should keep that money for backup/reserve.
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04-06-2009, 01:25 AM	#18
Houman21 Captain 30 Rep 949 Posts Drives: Nothin right now Join Date: Jul 2005 Location: L.A. iTrader: (0)	Normally I would say pay it off - but with the current economic tide, and the uncertainty of what's next, I say keep your money as a just incase insurance policy. __________________ 2008 e92 335i Step \| Is Gone - It was fun but not meant to be \| M3 - Cancelled \| 135 Ordered
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04-06-2009, 01:35 AM	#20
KkSc Major General 173 Rep 6,223 Posts Drives: 13'FR-S/15' F80 M3 Join Date: Feb 2007 Location: North Vancouver, BC iTrader: (10)	i would say yes! __________________ 2006 E90 Alpine White 330i - Retired 2015 F80 Alpine White M3
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04-06-2009, 03:17 AM	#21
ShinyRedCar First Lieutenant 7 Rep 366 Posts Drives: 2006 BMW 325i Join Date: Jul 2005 Location: California iTrader: (0)	I voted yes but...and this is a BIG 'but'...you have to be strong enough to put that $435 away each month. The problem with that thinking is that things come up like...life, you know? __________________ Jeff
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04-06-2009, 03:26 AM	#22
radix you know he kills little girls like you 390 Rep 892 Posts Drives: - Join Date: Feb 2008 Location: - iTrader: (0)	Considering your car is a 2008 335xi, and you only owe 11k on it you've already paid off most of the interest. You are also not upside-down on the car, so the car can be considered an asset as it's value far exceeds the debt owed on it. Taking these factors into consideration, and the fact that you will make more interest on the savings you have (i.e. using CDs or a HYMM), I'd hold on to the money and pay the debt down as you are now. The best advice I can give is to find a savings account that offers a better rate, or use CDs if you don't mind you money being tied up for a while.
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