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Posted in Auto Loans
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Question By
Tigu

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Refinance car loan or not
My car loan is 19.99%. Was going to make lump sum payment of 10K at the end of the month and the make 1.5 times my payment amount until it's paid off to save on interest. My friend advised me against it and said to refinance first and then put the 10K in an IRA and then borrow from it (10K0 )and then put money on car? Is this good advice?

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I think I understand your friend's point of view. If you put the 10k down on the vehicle loan - the money is gone. By putting it into an account and borrowing against it; once the loan is paid off you'll stil have the 10k plus interest. I don't believe you can borrow from an IRA anymore. You can borrow from a 401k in certain instances. You will need to check into this. 

What you can do, and I've done this through my financial advisor, is borrow against the invested money on margin. I pay 1% interest on "the loan", while the investment is earning much more.

You need to look and figure the actual dollars and cents of both scenarios.

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Doesn't sound like good advice to me. I would stick with your original plan.

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