Assume that you have a savings account that pays 7.00% annual percentage rate (APR), compounded monthly, with $100,000 in it on the day you bought your car. The best money -

managing philosophy would have been to take the money from your savings account and to buy your car with cash because you are paying more on your loan than your money was earning. 1 For whatever reason, you took the loan and are making your payments by withdrawing money from your savings. You now decide that you made a mistake and want to pay off the loan. In both the prepayment penalty examples shown above and also the case of no prepayment penalty, when is the best time to pay off your loan?