Quote:
Originally Posted by Dave-ROR
While true, his example is still an accurate portrayal of the concept.
Min $ comes into play clearly to determine a more detailed result as principal balance is required to calculate each month. IE, that 3% loan could be a $350/month car payment - or it could be a fresh 3 year loan (ok no one would do that I hope, but still).
However, it still doesn't matter.
For easy numbers, if it's the tail end of a 5 year car loan for $20k at 3%, that remaining $1,073 of principal costs him $3 of interest. If it's the fresh 3y $1k loan scenario, the interest over that lifetime of the loan is a whole $47.
There is simply no way that paying that off will ever beat that higher interest loan. Period.
Now, there's a gratification factor in paying off a loan. I get it, and have done so before even knowing it was the worse financial option.
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I was in total agreement that paying off the higher percentage loan first was the better option, so I'm not sure if you response was entirely meant for me, but his/her basic calculation on interest I knew was incorrect... too many smart people on here, I do more thinking here than I do for my job lol.... Being dumb is more fun,
I'M GOING TO MUSTANG FORUMS!