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Which debt to pay down first?

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First poster here!


I have the 2 following debts:


Auto loan: $35,000, 1.75% rate, 5 years, $610 payments

Student Loans:  $27,000, 3.68% rate, 20 years, $200 payments



I should not have bought the vehicle that I did and have realized this. But anyway, I have some extra cash in my monthly budget and was looking to which debt to pay down first.


!) The Auto rate is very low, likely below the rate of inflation. Also, I think I would be better off putting extra cash toward my retirement or mutual funds which would likely get a better return.

2) The student loans are beneficial becuase of their helping with my taxes.


Anyway, which should I put this monthly amount toward, auto or student loans?




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  • 3 months later...

I would ask what would be most beneficial to me by paying it down?

a) if i have a lumpsum $$$$ of lets say XXXX given my credit can i re-finance and lower my auto loan with a lower payment? Its simple interest they charge anyways?


B) see if you qualify for one of the most prolific forbearance/deferment request that can be applied to defer the student loan? their addition of interest for 1 year may be offset by paying off the auto loan and having smaller payments? in a lumpsum. ofcourse.


c) Paying off any amount in a lumpsum is always good for credit scores it shows better utilization i think?

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