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Paying off a 0% interest car loan early?

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  • disneysteve
    replied
    I don't think you're missing anything. 1.1% interest isn't much but it is better than 0%. As long as you always make your payments on time, there is really no financial reason to pay off a 0% loan early.

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  • Bal.Leona
    started a topic Paying off a 0% interest car loan early?

    Paying off a 0% interest car loan early?

    Hi guys,

    I have about 10.5k left and 4 years left on a car loan. (I know... next time it'll be cash!) It's at 0% interest and I have no problem making payments. It is my only debt. I've only had a car loan I paid off in 7 months and my student loans I paid off in 2 years as my credit history. I've never had a CC. My EF is at about 3-4 months, which I want to get up to 6. I'm also able to put about 10% into my 401k/ESOP to get the company match and to fully fund my Roth IRA. I've also opened a savings account at ING to start saving for my next car.

    My question is: would there be any advantage to instead be putting this money towards paying off my car loan sooner? My thought is that earning even 1.1% interest is better than paying to a 0% interest loan, an the only benefit to paying off early would be for peace of mind and to reduce monthly expenses, but I wasn't sure if there might be something I forgot to consider.

    I'd appreciate any insight or advice. Thanks!
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