I have a $12,000 car loan at 5.9% APR. I also have $15,000 in my brokerage account in VTI. Someone asked me why I haven't sold the investments to pay off the loan.

Here's my math: the loan costs me 5.9% guaranteed. My brokerage account historically earns 7-9% annually — but that's an average over long periods, not guaranteed in any given year.

Expected value says hold the investments. But expected value ignores: (1) the guaranteed cost of the debt vs the uncertain return on investment, (2) the tax consequences of selling in a taxable account, and (3) the behavioral simplicity of being debt-free.

For debt above 6-7%, I personally start to lean toward paying it off rather than investing. At 5.9%, I'm right on the line and I've chosen to invest, but I'd fully understand someone else choosing to pay off the loan. There's no clearly correct answer in the 5-7% range.