Should I retire this loan?

My wife has $25,000 in an outstanding loan. She is paying 4.75% with 19 years left on a 20 year payout. She is paying $166 per month. Over the term of the loan she will pay $13,913 interest.

I used to have the feeling that I should never pay off a loan if the interest rate is lower than I can get at the bank.

If we don't pay the loan we would make about $1250 per year in interest from a CD.

Should I pay off the loan in full now ?

Should I retire this loan?

Yes, Yes, Yes. Pay off the loan.

Should I retire this loan?

Its best to be debt free before going into investments. If the investment went wrong and you have to pay the loan bill it could end being a bad situation. Therefore, pay debt, then invest.

Should I retire this loan?

I would pay off the loan.

Should I retire this loan?

Greffy ... you are definitely on the right track. I know this because you are thinking about it and trying to decide ... exploring options, etc.

So far people have given good advice. I would usually say %26quot;pay off the loan.%26quot; However, IF you can make more money with a CD than you would pay in interest, I'd say invest in a CD. Your cash is sitting in a CD (which is a safe investment at $25K) and you are making more money than you are paying in interest for that outstanding loan ... buy a CD.

However, having a loan involves risk. You may find yourself at risk for missing a payment ... well, don't miss one. Cash in the CD to meet the payments ... you'll take a penalty, but that is better than missing a payment and risking your credit score.

Good luck!

Should I retire this loan?

Don't forget about the short-term capital gains tax on the measily $1,250.00......it's a loss....pay off the loan.

28% of $1,250 = $350.00

Should I retire this loan?

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