Paid off!!! It's officially ours!!

[BradnChristine]

This logic only works if you don't pay income tax. Most of us get a Form 1099-INT for the interest earned on the CD and can't deduct the interest expense on a personal vehicle. If that is the case, you should do better paying off the loan.

Believe it or not, I have the difference calculation in my spreadsheet.

At paying 4.74% vs earning 5.61%, AFTER TAX, it is a net+$152.10 to keep the loan, pay the taxes on the interest of the declining savings (paying the payment and reducing the saved amount).

I'm old enough to remember 15% CD interest in the late 1970s, rather than my current the 5.71%. If we get double the current rate next month to 11.22%, that $152 will become $2368.04 AFTER TAXES over the 60 month period of the declining savings amount. Interest paid: $2651.57 Interest earned before taxes: $5704.09.

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