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JoExoticTigerKing OP t1_ixwsqad wrote

Reply to comment by Late-to-the-party-77 in Parents left be about $33K in cash after they passed. How should I invest this? by JoExoticTigerKing

Thank you kind stranger.

Pay off the car in full? Would i not want to keep some line of credit open besides my home to avoid hurting my credit score?

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Remarkable_Night2373 t1_ixwxshg wrote

Honestly the 2.5% is dumb to pay off when you can get guaranteed higher returns.

Leave the account open and keep those payments going .

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whisky_in_your_water t1_iy09ifd wrote

Yup, get a CD or t-bills and you'll make more than that 2.5%. If rates drop below that 2.5% rate, feel free to kill the loan.

That said, if you'd get much cheaper insurance without the loan, paying it off could be the better move because you'll get more than the 2.5% of value from it.

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Remarkable_Night2373 t1_iy0c0vt wrote

Generally if there’s still a loan on the car it’s worth keeping it insured. I have a mini van that’s been paid off for several but I’m paying for full coverage because value is still higher than it should be since people are overpaying for used.

Math is shifting to basic coverage though as it’s getting older.

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whisky_in_your_water t1_iy0fajk wrote

Most auto loans require comprehensive insurance, so it's not just a good idea, it's mandatory if you don't want the bank to call your loan.

Whether you should get comprehensive or liability depends on your ability to cover damages that comprehensive would cover. I get liability only because my cars are essentially worthless (both under $5k even in this crazy market) and i can replace both of them with cash. That may not be true for you.

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Ecstatic-Permit2628 t1_ixx6mzx wrote

I would also. Pay off the car and free up the payment next year for your 2023 ira. Use the remaining balance to fund your 2022 ira after paying off the car this year.

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Late-to-the-party-77 t1_ixwuctu wrote

I would. Do you have any credit cards open? If so, they will continue to build your credit as the length of time they are open grows. Best case scenario is that they are paid off each month. The ratio of credit used / credit available also affects your score. The lower the ratio the better.

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