So here’s an interesting one. I have a car with a 72-month note, that I’m halfway through. The payments are pretty high, around $1,100/mo (luxury sports car). I just checked the Black book value, and the value on other sites and I have almost $20K in equity in it right now. I also have enough saved up to pay it off and still have more than enough money left. The interest rate isn’t too bad, around 5.4%.
So what I’m trying to figure out, do I:
- Pay it off - takes a chunk from my extra money, but no more payments. That extra equity is locked up and could go away if the market changes over the next few years
- Refinance - I could see keeping the car another 4-5 years, and I could put a little extra from savings in to further lower my months costs. I don’t think I’ll end up upside down with how far ahead I am, but again, the equity is locked up
- Trade it in - this is the tricky part. I could get a good chunk off something, but I love my car, and also there’s no way I could get anything nearly as nice as what I have. If I were to lease I could easily cut payments in half, but I have another car on lease and don’t want two of them that way
I can’t make it with one car, otherwise I’d flat out sell it, and I understand the pros/cons of leasing. I’m also not a “something to just get me from point A to B” type of guy, I like my cars, so please don’t lecture on that. I’m basically trying to think about cash flow for the near term and the fact that having a car with $20K equity is something I need to at least figure out if it’s worth accessing that.