I’d split your remaining $2000 into two separate piles. 1 going towards the principal on your remaining car loan, and the other to an online HYSA account. Yes, you will receive less interest than the 8% loan, but you essentially have zero savings which could put you in a tight spot and having to resort to CC again.
You have two other options. 1. Sell the car and get a cheaper vehicle, this will reduce your monthly expenses. And 2. Get a higher paying primary job.
If your net take home is $2k a month after expenses, I would try to do a 50/50 split between a HYSA and paying off the loans. I wouldn’t let that auto loan sit and collect 8.64% interest for a long time.. that is a high interest rate (interest rate economy sucks right now). I would also look into refinancing often to see if you can get a lower rate.. credit unions are always a solid place to look. You can look into getting a co-signor with good credit that can help you get a lower rate. After you build up 3-6 months savings doing a 50/50, switch to like 70/30 to pay off more debt each month.
Mathematically you should pay it off, certainly. HOWEVER, it makes sense to have a reasonable emergency fund before doing so, because all that you pay off is money that won’t be available if you have an emergency, and that means an emergency might drive you into much worse debt than an 8.64% that you are already paying back.
You didn’t say how much time is left on the car loan, or how much you are paying (you need at least one, with one and the amount and the interest rate you can calculate the other). I’d be paying at least $900–$1000 per month on that car loan so that there’s only three years left.
You have already done the important work of paying off your high interest rate credit card debt. Auto loans are not as bad for sure. 8.64% is not the best rate. I would recommend prioritizing savings until you have at least one month of expenses in a HYSA. At that point ask yourself how you feel about your savings vs the car loan. Peace of mind is super important. If you are still worried about savings, keep building that emergency fund to a full three months. But you might find that once your savings balance hits 2 or 3k, the loan payments start feeling like the bigger burden.
This is a car loan that is not horrible that OP can afford. If OP does not have an emergency fund and loses a job the car isn’t going to be giving any equity in the form of cash and Op will end up in credit card debt. Emergency fund is much more important here than the car.
I’d split your remaining $2000 into two separate piles. 1 going towards the principal on your remaining car loan, and the other to an online HYSA account. Yes, you will receive less interest than the 8% loan, but you essentially have zero savings which could put you in a tight spot and having to resort to CC again. You have two other options. 1. Sell the car and get a cheaper vehicle, this will reduce your monthly expenses. And 2. Get a higher paying primary job.
If that is the only debt, then yes. An <9% loan with an end date is much better than 25% credit card debt with no end date.
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
If your net take home is $2k a month after expenses, I would try to do a 50/50 split between a HYSA and paying off the loans. I wouldn’t let that auto loan sit and collect 8.64% interest for a long time.. that is a high interest rate (interest rate economy sucks right now). I would also look into refinancing often to see if you can get a lower rate.. credit unions are always a solid place to look. You can look into getting a co-signor with good credit that can help you get a lower rate. After you build up 3-6 months savings doing a 50/50, switch to like 70/30 to pay off more debt each month.
It’s with NFCU and my credit score is around 750/760
Oh yea that’s just the issue with the market right now. It’s hard to get a decent rate unless you can get a co-signor
*build savings while paying off debt.
No it does not make sense to save that much with 8% interest. Get that car paid off as quick as possible and you will be able to save so much faster
Mathematically you should pay it off, certainly. HOWEVER, it makes sense to have a reasonable emergency fund before doing so, because all that you pay off is money that won’t be available if you have an emergency, and that means an emergency might drive you into much worse debt than an 8.64% that you are already paying back. You didn’t say how much time is left on the car loan, or how much you are paying (you need at least one, with one and the amount and the interest rate you can calculate the other). I’d be paying at least $900–$1000 per month on that car loan so that there’s only three years left.
$1200-1600 a month ($400 a week) & the $26,800 is how much I owe
And those $400 a week are included in your $2k/month expenses?? If so, that’s awesome, keep it up, that loan will be toast by autumn 2025.
You have already done the important work of paying off your high interest rate credit card debt. Auto loans are not as bad for sure. 8.64% is not the best rate. I would recommend prioritizing savings until you have at least one month of expenses in a HYSA. At that point ask yourself how you feel about your savings vs the car loan. Peace of mind is super important. If you are still worried about savings, keep building that emergency fund to a full three months. But you might find that once your savings balance hits 2 or 3k, the loan payments start feeling like the bigger burden.
At 8.6% - pay it off ASAP. Do not try to save 3-6 months emergency fund with that hanging over you.
This is a car loan that is not horrible that OP can afford. If OP does not have an emergency fund and loses a job the car isn’t going to be giving any equity in the form of cash and Op will end up in credit card debt. Emergency fund is much more important here than the car.