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On Mon, 3 May 2004, Jerry Gamblin wrote:
> I owe 12 more $85 dollar payments on a loan to my local bank. If I go
> and pay it off today (tomorrow) it will only cost me $953. I have about
> $1500 in a normal savings account and more money in CD's that I could
> get out if an emergency occurred.
>
> It will cost me $6 in interest a month to pay off the loan at $85
> payments instead of just going in and paying it off. Is it smarter to
> just pay off the loan or to keep the money in savings and just make the
> payments?
Pay it off. $6 per month on a principle of $953 is a rate of about 7.5%.
You are only getting 0.5% in the bank. So pay it.
The only reason you wouldn't pay it now is that you need the money for
something else, like rent. If you don't need the money and all you can
get with it is 0.5% annually, pay off the loan.
Mike
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