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BacktotheFutureTmw t1_ivr3489 wrote

Also...depending upon what the interest rate is on your car loan, I wouldn't pay it off unless it made sense to. So for example, if you have a savings account that accrues 3% but your interest rate is 2%, it would make more sense to let your money grow at a 1% higher rate than pay off the loan. I hope that makes sense.

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THROWAWAYHELLLLL OP t1_ivr3u10 wrote

Car rate is 2.75% and savings is 1.7, I think. It does make sense, I just want to have it paid off in terms of debt-invoke ratio when I finally try to get pre-approved for a house.

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mcgeggy t1_ivr8oou wrote

> Car rate is 2.75% and savings is 1.7, I think

Look into another savings account, possibly even in your same bank. For example, Ally Bank has savings account with 2.75% interest rate. I had a Capital One savings account with a measly .30% rate, then realized they had another type savings account with over 2% interest. No minimums for any of them either… For some reason, some savings accounts don’t raise their rates, and others keep bumping up as the federal interest rates go up.

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THROWAWAYHELLLLL OP t1_ivr9jj9 wrote

I was thinking of switching my savings though, I heard about Ally. There are just none that I know of near me, and I like having one close by just in case I need it (even though I literally do everything online). The best one at my current back is for people who have REALLY HIGH balances, and it has a high minimum. The other options are CDs but I don't want to lock my savings away in case of an emergency. I love my bank, been banking with them since 17, so it's a tough choice. But I really want to maximize.

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mcgeggy t1_ivrb667 wrote

Yeah, it’s definitely harder to find good rates at brick and mortar banks. I’ve been banking online for over 20 years and love never having to step foot in an actual bank, with all of their other fees to boot. You could always keep your checking in that bank, and open a separate online savings at ally, or other higher yield savings bank.

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Dreurmimker t1_ivri30g wrote

There’s no need to abandon your current bank entirely. You can keep your current bank for the deposits and day-to-day banking, but transfer excess out to an Ally savings account. Typically less than 2 business days, sometimes faster depending on your bank. This is what I do, and I couldn’t be happier with my experience with Ally. FWIW they are part of the allpoint atm network, so you’d be able to use any of those ATMs for cash if you opened a checking with them: https://www.ally.com/bank/find-atms/

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THROWAWAYHELLLLL OP t1_ivricxj wrote

Holy crap that is cool. I am deff thinking about it if they have ATMs. Sad they don't have any physical locations but I think I might over look that to get my savings up.i want to make max profit while keeping it liquid just in case I need it.

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defalt86 t1_ivr5cce wrote

At those numbers, paying it off only saves you about $100/yr (give or take). If debt to income ratio can handle it, you're probably better off putting that money towards the down payment.

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THROWAWAYHELLLLL OP t1_ivr5k28 wrote

If my debt to income is good, then I might just save for the down payment. I thought debt-income was the most crucial aspect for getting pre-approved, so I wanted to make sure I had minimal debt to secure my chances.

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TodayTime8321 t1_ivr6pfg wrote

Your credit score will take a hit when the car loan is fully paid off. It will bounce back but you will still take a hit. I recommend trying to plan a home purchase while you still have that loan on your report when it is mostly paid off but still active. Like when there is still $2500 or so left. Not a huge amount of debt but the payment history will keep your score high.

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THROWAWAYHELLLLL OP t1_ivr85yj wrote

Oooo ok, I did hear about the credit hit but I assumed it would fall off rather quickly. So stupid that paying off your loan makes you look worse. I will keep that in mind. Hopefully I'll be at that rate in a few years. I have savings, and with that in mind, I could pay it down to that amount, and have enough to put towards a down payment. That actually shortens my potential wait time by a bit! Thank you!

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ForestGuy29 t1_ivt66q1 wrote

Depends. The car loan will count against his debt to income ratio, a major factor in the amount the bank will lend to you.

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TodayTime8321 t1_ivtrpnv wrote

If the amount is low and there is no other debt it will be fine. Having that credit history on her report will help her with a mortgage.

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