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Take a lower interest 9-year car loan, put the rest in FD, but settle early? No, it doesn't work that way, here's why

By Eric Sterling
Published in Loans
May 19, 2023
1 min read
Take a lower interest 9-year car loan, put the rest in FD, but settle early? No, it doesn't work that way, here's why

So, I just read this article called “Take a lower interest 9-year car loan, put the rest in FD, but settle early? No, it doesn’t work that way, here’s why” and it was a real eye-opener. Basically, the article explains why it’s not a good idea to take out a long-term car loan and invest the extra money in a fixed deposit account.

According to the article, some people believe that taking out a 9-year car loan with a lower interest rate and putting the extra money in a fixed deposit account can earn them more interest than they’re paying for the car loan. But in reality, this strategy doesn’t always work out. By the time you factor in taxes, fees, and inflation, you might not end up making as much money as you thought. Plus, if you decide to settle your car loan early, you might end up losing money due to prepayment penalties.

I can relate to this because I’ve been tempted to take out a long-term car loan myself, thinking I could use the extra money to invest in something else. But after reading this article, it’s clear that this isn’t always the best financial move. It’s important to consider all the costs and potential risks involved before making any big financial decisions.

Overall, this article is a helpful reminder to think carefully before taking out any long-term loans and to do your research to make sure you’re making the best decision for your financial situation. As my dad always says, “there’s no such thing as a free lunch!”


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Eric Sterling

Eric Sterling

Freelance Reporter

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