No. of Recommendations: 6
I would suggest that you can do better by saving the extra snowball money instead of giving it to the finance company holding your car loan. If you're only paying 1.9% interest, you can get at least 5% by depositing it at Emigrant Direct or any of a number of other companies. No sense giving them the money sooner if they'll let you make more on it than you're paying.

This can be true, but there are some other things that should also be considered for vehicle loans: 5% after federal taxes is generally 3.75% or less, depending on your tax bracket. Your net savings, after taxes and interest on the car loan is 1.85%. If your balance is $20k, that will be a net of $370 over the course of a year.

If you can save more than $370 in a year by either dropping comprehensive and collision completely, or by raising your deductible from, say $250 (what my last car loan required) to $1000, then you would come out ahead in a year by paying off the loan early, rather than keeping the money in your savings account.

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