I'm getting ready to buy a IS250 AWD and for tier one credit I can get a financing rate of 6.4% for up to 60 months. The financing rate is the same regardless to whether I pay off the car over 36 months or 60. Does that make much sense? And if the interest rate is going to be the same, then there really isn't much incentive to pay it off quicker, right?

 

The only case when it doesn't make sense to pay it off sooner is 0% interest or if you are confident that your money can earn you more than the interest rate.

The incentive to pay off 6.4% in 36 instead of 60 is the 24 months of extra interest. Depending on the balance, this could be a few grand or more.

 

the interest rate may be the same. but the sooner you pay off the car the better. you should compare the 36 months to 60 months using a financial calculator. see how much you will save by paying it off in 36 months.

go here for some good financial advice and calculators

http://www.bankrate.com

 

At 6.4% interest rate the difference in total interest paid between a 36 mo and 60 mo loan is $694 for every $10,000 borrowed. It is almost always better to pay it off as soon as possible. Many people say if you can invest your money at a higher after tax interest rate than what you can borrow it is to your advantage. That is true only if you have the discipline to do that. Most people don't have that discipline.

 

This is a very good point. If you don't force yourself to make your money work for you, it won't. Money is lazy like that.

 

Moved here.....

 

The monthly payment will be higher for 36 months, but the total money paid out will be higher for 60 months.