If you have the money, write a check and pay off the car, says Dave Ramsey. Paying off a car sooner can help save money for other financial goals.
People always say, 'Well, Dave, if I were a millionaire, I'd be able to pay cash for a car too!' No, you're not getting it. These people don't buy with cash because they're rich; they're rich because they buy cars with cash! Think about how much the average American spends on car payments over his lifetime. The average payment is around $716 a month right now. If you invest $716 in a good mutual fund every month from age 25 to 65, you'll end up with more than $6 million.
If you can, pay off the car sooner than later to not only reduce principal but also overall interest, and ensure extra payments are made directly to the principal.
Make sure you don't refinance your car at any point. This will extend your loan and you’ll pay even more interest than necessary. Additionally, consider shopping around for less expensive car insurance to avoid overpaying for coverage.
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