Where should I put an unexpected $18K?

I have a house payment of $1.1K per month with escrow at a 2.8% interest rate, and it will be paid off in 2 years. I recently bought 2 new cars with a combined monthly payment of $1.1K at 6.25% interest for 6 years. Should I use the $18K to pay off the house or put it towards the cars?

Definitely don’t put the money toward the house at 2.8% interest—that’s a very low rate and not the best use of your money.

Pay off whatever has the higher interest rate first. In your case, that’s the cars.

If you already have an emergency fund, put the $18K towards the smaller auto loan, then snowball that into paying off the larger one.

You definitely shouldn’t put it toward the house payment. That low 2.8% interest rate is a great deal.

If you can pay the house off completely, I’d vote for that. But your post makes it unclear if that’s possible.

Drue said:
If you can pay the house off completely, I’d vote for that. But your post makes it unclear if that’s possible.

I only owe $20K on the house, and it will be paid off in 2 years.

@euvnelly
In that case, I’d throw the $18K at the house, leaving you with just $2K to pay off. You could then take the $1.1K you’d no longer be paying on the house and use it toward the car loans.