i have $2000 to put into an savings account...

[swiftaw]

It's simple. Is the interest rate of your loan higher than any interest rate you could get on a savings account/cd etc?

If so, you'll be better off using the $2000 to pay down the loan now, rather than putting it in a cd/savings account.

 

[waloshin]

It's simple. Is the interest rate of your loan higher than any interest rate you could get on a savings account/cd etc?

If so, you'll be better off using the $2000 to pay down the loan now, rather than putting it in a cd/savings account.

The interest rate is 6.25%, 3.25 percent is variable while the 3.00% is compound now I know variable is bad... but having money saved up for if the car broke down is a great idea, or if i lost my job ect.

 

[yg17]

The interest rate is 6.25%, 3.25 percent is variable while the 3.00% is compound now I know variable is bad... but having money saved up for if the car broke down is a great idea, or if i lost my job ect.

6.25 is greater than 3, so pay down the loan with that money.

 

[Paul B]

Slightly OT: schools really need to teach some kind of personal finance course.

 

[kellen]

I would keep half or all of it as an emergency fund if you don't have one, don't pay down the loan. While it doesn't make monetary sense, I believe its a good thing to have.

Also try looking at some banks that offer a bonus when you sign up. My citi online savings account offered me 200 dollars for opening a savings account with 1000 minimum and making 2 or 3 deposits. That will easily beat any interest you will find.

 

[abijnk]

The interest rate is 6.25%, 3.25 percent is variable while the 3.00% is compound now I know variable is bad... but having money saved up for if the car broke down is a great idea, or if i lost my job ect.

Paying it to your loan would save you about $600 over the life of the loan. So yeah, do that. In general, paying off debt should come first.

 

[Antares]

Paying it to your loan would save you about $600 over the life of the loan. So yeah, do that. In general, paying off debt should come first.

I agree....but only once you have an emergency fund. Ideally, you should have cash to cover 3 to 6 months worth of monthly expenses saved and set aside... in a savings account. Once you have that in place, put the rest of your available monies to paying down debt.