Should I pay off after getting laid off?

[Tucker80]

At the end of the day we all pay to play. No free lunch for anyone. Good thing is zero Interest and who knows what he owes. Im a huge believer in being debt free where possible, with that said ive spent more on my car than what its worth we all know what we gotta do when the time comes.

100% agreed! I would never have considered payments but zero interest was too much to pass up. My plan was to pay once, but finding out there was an option for zero interest changed that fast!

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[ORRadtech]

Having unexpectedly lost a couple of jobs in my life I know what I would want to do.
I would want the extra cash cushion in the bank earning interest. This would be especially true with a zero interest loan.
The OP may have good interview prospects but that is far from a guarantee of a new job. I have a friend who is a highly qualified man in his field. It took him 3 years to find his new position.
I would be in no rush to pay off that loan any sooner than I absolutely had to. The cash is earning interest, paying the loan off early does nothing but move an increasing asset to a depreciating one.

 

[DougS550]

I would gamble the cash on NCLH or SMCI stock if can afford to hold for up toa year for likey 50% gain.

Or he could have invested his money on the stock rxchange on Newsmax or Trump Meme Coin and made a 700% profit by the end of the day. Or he could just play it safe until he has a new job?.

 

[Boosted Pony]

Why? I would rather take the 4k and put it into a 6 month CD and have an extra $200 at the end?

I get paying off high interest loans early, 100% the right move. But 0% loans is one of the worst things you can do financially when you have even 4% APY from safe savings account if you don't want to take a risk in the stock market.

Say you have a 50k loan at 0% and you have 50k cash under your mattress. You can either take that money and pay it off day 1, or take that money put it into a 4% APY savings account and every month make the payment from there. At the end of the loan payment, you have a paid off car and $5700 in your pocket vs. $0. And your day to day financials would not be affected by this "payment" because it's all coming out of your mattress money anyway.

LOL, he can either pay off the loan each month and still end up with nothing or he can payoff the loan now and not have to spend the money on payments each month over the next 5 months.

There is no $4,000 dollars to invest, he has to pay the $4,000 dollars to the lender either way. He says he has money saved up and will have a severance package so he can afford to payoff the debt, so pay it off and be free of it. That will free him of the over $700 dollar a month car payment.

 

[Arthonon]

I'm in the don't-pay-it-off category. Again, having the money to spend seems safer than spending it and not having it, and as has been pointed out, paying a 0% loan off early saves you no money.

However, not that this will take a long time, but typically, due to inflation, future money is worth less than current money, so paying it off now is using the current higher-value dollars vs. paying it off in the future with lower-value inflation dollars.

 

[2023EGM1]

Cash is king in those situations, even more so if interest free.

 

[EFI]

That will free him of the over $700 dollar a month car payment.

Yeah, after he gets freed of $4,000 from his bank account.

Spending $4,000 to save $700 is solid financial advice especially for the unemployed.

 

[Dave2013M3]

I have, I think, 5 more payments left. 718$. But I just was laid off. Would you just bite the bullet and pay off the car or just try and make it work? I have 0.00% APR. And everyone keeps telling me not to pay it off because its free money. I just feel better if I would get rid of that payment.

I've already landed positive interviews somehow. So I'm not dead in the water. I received my PTO pay out and have a severance coming on Friday. Should put me way over the amount needed to pay it off. So I will have plenty of money if I do. But would you? Or would you just ride it out because its 0.00% APR?

I can't wait to be done with this payment. Most expensive thing I have ever bought in my life.

No don't pay it off. You really aren't saving any money. Almost all of the payment is principle, very little interest.

 

[S550HPP]

Or he could have invested his money on the stock rxchange on Newsmax or Trump Meme Coin and made a 700% profit by the end of the day. Or he could just play it safe until he has a new job?.

Cash rich afford luxury to invest in solid companies with high demand.

 

[IPOGT]

Have to admit, when I first read the ops post I didn’t see the word “off” at first.

 

[Joker721]

Losing a job is hard for anyone. You have my sympathies there. I was out of work for 9 months during the recession and extra cash always helped and Cash in hand is king.
If something happens (god forbid) you have the money on hand to help in that situation and it’s not tied up in your car.

 

[EFI]

Almost all of the payment is principle, very little interest.

With 0% APR, there is no interest it's all principal.

 

[Dave2013M3]

With 0% APR, there is no interest it's all principal.

Even more reason...

 

[Top_Notch]

The thing about personal finance, is, well, it's personal. Having lost your job, I'd want the cash around so I'd keep making the payments.

I'm older than most here so I may have more hindsight. I have only borrowed money 3 times in my life, one for my college education and twice for my homes. Everything else was paid cash, especially for any depreciating asset like my Mustang or boats. I paid off my homes early. Experts will say there is lost opportunity costs by investing that money. Well, it is invested, in real estate or myself. Not only does it help my diversification, I've found it rare that people actually recoup lost opportunity costs just out of human nature. Secondly, there is no better feeling than having ZERO debt. Third, having zero debt means cash reserves build quickly, very quickly. This in turns means even more freedom. Compound interest works, and it works exactly the same in reverse. Do everything you can to not be behind the 8 ball. YMMV

 

[stephensatt]

Get the new job then pay it off. Better to have cash on hand in case it takes a while to land a new gig. Congrats on the parenthood thing. (I assume an older kid?) Make the best of it.

Yeh, my old man is a financial advisor. Cash on hand is most important when you are not working and anything that delays payments and kicks the can down the road is the best option. You never know what could happen. You could be in a wreck on the way to the next interview and you want that cash to pay for incidentals.

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