{"id":112213,"date":"2019-06-22T12:00:34","date_gmt":"2019-06-22T18:00:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=112213"},"modified":"2024-02-24T13:12:16","modified_gmt":"2024-02-24T20:12:16","slug":"pay-off-car-loan","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/pay-off-car-loan","title":{"rendered":"How to Pay Off Your Car Loan Early (& Never Pay for Your Car Again!)"},"content":{"rendered":"

When people ask me about whether or not they should pay off their car, it always leads to an interesting discussion.<\/p>\n

Why?<\/p>\n

As is super customary for me when writing articles, teaching, or speaking, I will not speak in theory or ideas but rather from personal experience.<\/p>\n

Why not create an asset that can then pay for your car or other toys? Here\u2019s what I did at the end of 2018.<\/p>\n

Related: <\/em><\/strong>Why Getting Comfortable With Discomfort Is Key in Real Estate<\/a><\/em><\/p>\n

\"Close<\/p>\n

Create a Cash-Producing Asset<\/h2>\n

I wanted to purchase a winter vehicle so I would not have to drive my convertible in the cold. But I hate buying cars, knowing they depreciate the second I drive off the lot. I especially hate it if I\u2019m paying with after-tax dollars or even money from my company.<\/p>\n

We were looking for a new office building in 2018. We found a property where the seller was willing to do owner financing<\/a>. (This is one of three ways we buy\u2014never using banks or signing personally on loans.)<\/p>\n

He also had two existing tenants in the building<\/a> that were paying 20-year-old rental rates. Both wanted to stay.<\/p>\n

We structured a monthly principal payment that was a bit less than the total rent being collected the day we closed on the property. This meant it was cash flow positive immediately. That left us with two-and-a-half floors of space. Our company would take part, and we’d rent out the rest<\/a>.<\/p>\n

So without even filling the building, we were looking at a $3,000 or so positive monthly cash flow.<\/p>\n

I then very conservatively went out and purchased a new Jeep for the winter so my convertible could remain in storage for the lovely New England winters. The Jeep payment is only $650 for 48 months. But with the positive cash flow from the building, we mail in an additional $250 principal. That way, we will pay it off sooner than the original amortization.<\/p>\n

Related:<\/em><\/strong> Owning Your Own Office Is Easier Than You Think<\/a><\/em><\/p>\n

\"\"<\/p>\n

Did we get an office building by sticking to our buying guidelines\u2014not taking out a bank loan and not signing personally on any loans? Yes.<\/p>\n

Did we create a positive cash-flowing asset that then can be used to buy a toy (i.e., Jeep)? Yes.<\/p>\n

See, that\u2019s what the wealthiest people do if you study them. They create assets to pay for their toys. They never pay for toys out of after-tax profits.<\/p>\n

Should you pay off your automobile loan early? No.<\/p>\n

Should your cash-producing asset pay off your automobile loan early? Why not?!<\/p>\n

If you learn how to buy on terms, you can learn how to create cash-producing assets that can pay for everything else.<\/p>\n

\"\"<\/a><\/p>\n

How much is your car payment? Are you trying to pay off your car loan early?<\/em><\/p>\n

Share in a comment below!<\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

When people ask me about whether or not they should pay off their car, it always leads to an interesting discussion. I like to tell stories, so I tell them about the time I bought an office building that ended up immediately paying for itself and a new car. <\/p>\n","protected":false},"author":443067,"featured_media":99445,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7397],"tags":[],"class_list":["post-112213","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-saving"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/112213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/443067"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=112213"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/112213\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/99445"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=112213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=112213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=112213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}