No-Cartographer7427 t1_jegddi7 wrote
My choice would be to Pay off the car note. Take some of the cash and save as rainy day fund, then put the rest as downpayment for a piece of property. Don't buy your dream house right away. Buy the bare minimum to fit your current needs to keep payments low, even if you can afford more. Take the extra monthly money and double up on your mortgage to pay off the house early and save lots of $ on interest. Then, when you pay that one off, upgrade and keep the first house as an income property. When you make the extra mortgage payments, separate it from your normal minimum payment and Notate on the extra payment that it goes to Principal Only. If you do not do that last part, depending on who you get the mortgage from, they will most likely apply just apply it as an early payment for the next month.
Also, I recommend using a Credit Union for the Mortgate.
Exotic-Art-2687 t1_jeglwzu wrote
It makes no sense to pay down a car loan at 2.5% when you can make 4% (likely 3% after taxes) risk free in a HYSA or up to 5% risk free with slightly more hassle through CDs, money market accounts, or bonds.
It makes even less sense to pay down that car loan when they have student debt that is not dischargeable in bankruptcy and will soon be at 4.5% interest.
It makes even less sense again if they will soon be buying a house that will likely come with a mortgage interest rate of ~6%, plus potential PMI if their down payment is not large enough.
They're better off saving money in a HYSA now and using it toward their house downpayment when that comes. If interest rates decrease (so the HYSA is earning less and the mortgage rate is lower), they can always put the saved cash toward the car (or potentially preferably the student loans depending on what happens with payment pause/forgiveness) and come out ahead of where they'd be if they put the money toward the loans now.
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