Interest rate at which you pay off

[LivingAlmostLarge]

What interest rate do you pay off and stop carrying the debt? Is it 4%? I ask because our car lease is up and we're going to buy it. I am seeing 4-5% rates right now which leans towards just paying off the car. The current car loan from december was 2.24%. It's gone up fast.

[corn18]

0%. For some reason, my mind now hates having any debt. The numbers clearly indicate I should have kept my last car loan @ 0% for 4 years, but I paid it off as soon as the first bill arrived. You guys have ruined me.

[msomnipotent]

For a car? Yes, I would pay it off at 4%. Any time I have the cash available and the loan is higher than what I could earn in a savings account, it gets paid off ASAP. A mortgage is a little different. I'm used to having between 6% to 8% mortgage interest (because I'm old enough to remember those rates, not because I have bad credit), so 4% is still cheap to me.

[disneysteve]

A mortgage is also different because of the tax treatment of that debt.

For a car, I wouldn't pay more than 2-3%, and even at that rate, I'd pay it off as fast as I could. Both of our current cars were bought at 2.9% I think. I paid off mine in 12 months and my wife's in about 36 months (that was while DD was in college so money was tighter or else it would have been faster).

[Jluke]

A mortgage is also different because of the tax treatment of that debt.

Old way of thinking?

im in year1 of a 30-year. 200k at 3.875%.

I cant deduct the mortgage interest or itemize the property taxes this year.

I would say 4% on a loan but I would also need to look at the total interest over life of loan to know for sure.

[disneysteve]

Old way of thinking?

im in year1 of a 30-year. 200k at 3.875%.

I cant deduct the mortgage interest or itemize the property taxes this year.

Sorry. I'm not up on all of the new tax changes. If mortgage interest is no longer deductible, that would alter things for sure.

[riverwed070707]

Old way of thinking?

im in year1 of a 30-year. 200k at 3.875%.

I cant deduct the mortgage interest or itemize the property taxes this year.

I would say 4% on a loan but I would also need to look at the total interest over life of loan to know for sure.

Whats this mean? Why can't you deduct it?

[Jluke]

Whats this mean? Why can't you deduct it?

Married, Filing Jointly. Standard deduction in 2018 is $24,000.

State and Local Tax, including property taxes is capped at $10,000.

I would need $14,000 in mortgage interest and/or charitable donations just to get to the standard deduction. I will have about $7500 in mortgage interest this year.


If someone files as single, then the standard deduction for 2018 (I believe) is $12,000. so they might be able to deduct mortgage interest.

[kork13]

Pretty much anything above 2% interest, I'm going to be paying down as fast as possible. That includes most car loans (though I've always killed those fast regardless of interest), and even my mortgages (2.75% rental & 2.385% current home). I'm currently paying nearly 6x my rental mortgage's monthly payment, plan is to get have it paid off NLT next July.

[greenskeeper]

Only debt is my mortgage and I'm knocking that out at a pretty good clip.

[LivingAlmostLarge]

I think we are going to pay cash for the car and then consider paying off the other car. I hate this debt.