Had to pick between paying off a car loan early or boosting my emergency fund

I had an extra $2,000 last month and chose to pay down my auto loan instead of adding to my savings. My interest rate dropped a bit, but now I'm nervous about having less cash on hand. What would you have done in my spot?

4 comments

4 Comments

pat_stone2mo ago

Paying off debt is a solid move, especially with interest rates being what they are. That $2,000 saved you future interest, which is a guaranteed return. I'd sleep better knowing the loan is smaller, even if the cash cushion is a bit thinner for now.

rowanhernandez2mo ago

You ever think about how weird it is that we call it "good debt"? Like my buddy had a car loan at a decent rate and everyone said it was fine to keep it. But then he lost some overtime hours and that payment started to feel real heavy. He ended up selling the car to get out from under it. Makes you wonder if any debt is truly good when life can change so fast.

irisowens2mo agoMost Upvoted

But debt is just a tool, right?

smith.nancy1mo ago

Wait, you actually paid it off and now your interest rate dropped a bit? I thought once you signed the loan the rate was locked in, that's wild. Makes me wonder if I've been missing something with my own car payments.