Dear ,

Ooops! I forgot to ask you something today. I promised my daughter I'd quiz you.

Are you a financial wizard? Especially concerning the advantages of prepaying off a loan?

Imagine this scenario:

You have a six-year car loan that's still got 62 payments left. It has an outrageous 10% rate because the borrower was young yet had a great credit score of 780.

The principal due on the loan at this time is $22,600.00.

Now imagine you have a spare $5,000 you want to do something with.

You go to a giant national  bank and they're offering a CD at 3 or 4 percent. Yes, that's less than the raging inflation rate and you have to pay taxes on the interest!

I told her it would be far smarter to pay down the principal on the loan as it would save a vast amount of interest over the remaining 5 years.

How much? I went to this website and plugged in the above values and came up that it would reduce the total interest outlay over the life of the loan by $6,194.24.

Is that CORRECT? If not, what website should I have used?

Since you're the financial EXPERT, what would you do with the $5,000 to get the best use out of it?

Yes, I also told her to re-negotiate the loan because since she signed on it she got an unbelievable job making a very respectable salary.

THANKS!

Tim Carter

Founder - www.AsktheBuilder.com

Daughter Advisor who knows you can only do two real things with money: Be a lender or OWNER and that being a lender usually is not a great thing to do with your money - unless you're a bank that can lend money they create out of thin air.

Oh, you don't know about this???? You don't realize the money a bank gives you at a loan closing is not real money???

You don't realize banks act like miniature Federal Reserves that create money that doesn't really exist?

😲