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Recentgrad998

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Should I pay off my loan in 2 years?
Graduated a few months ago, started work 2 months ago. Bought a car earlier this month at a fantastic interest rate 1.7%! I financed 72 months to get that rate, but there are no early payoff penalties so I am for sure going to pay if off in less than 48 months. However, my situation is unique. I am living at home for the next two years with my only expenses being my car, gas and insurance. So do I shoot to pay off my car in that two year window or do I stick with trying to pay it off in 44 months and save the difference for a home, ring and wedding in 2018? Thoughts?

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My opinion

I would suggest saving the excess money instead of paying it off as soon as possible. It is nice getting out of debt, but that money could be put towards an emergency fund or something useful should the unfortunate time ever arise. 

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You do not mention if you have any other loans like student Credit cards.  If anything has a high interest rate (greater than 9%) work on paying that first.  Then you might want to look at student loans, typically in the 3-5% range, and work on paying those.  Once that is done, you should save liquid savings for a few months of living, then once that is done, start to pay off the loan early, then start saving for the house etc. The reason for this is that unless you are putting the money into mutual funds or stocks, no CD in short term or savings, or money market will get you even the 1.75%. Now if you wanted to start ROTH IRA, invested in mutual funds, then I would suggest that before paying off the car.  ROTH gives the advantage of being able to withdraw the basis (money you put in) without any taxes or penalities, and allows the money earned to grow and be drawn out in retirment tax free.

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