Is Paying Off Your Car Loan Early Possible?

Finance Paperwork with Glasses

 

Everyone’s financial situation is different but if you’re wondering if paying off your car loan early is possible? The answer is yes! Paying off your car loan is most likely allowed. However, you’ll want to ensure that it’s allowed per your loan agreement. Of course, there are some situations where paying off your car loan early may not be a good idea.

Fortunately, with the guidance of our finance experts, you’ll have a clear answer about paying off your car loan early. Learn more about paying off your car today with Silko Volkswagen! We’re going to go over the following information to help you better understand the nuances of paying off your car loan early:

  • Is it good to pay off a car loan early?
  • When should you not pay off a car loan early
  • How to pay off a car loan early

Is It Good To Pay Off a Car Loan Early?

So, is it good to pay off a car loan early? The answer truthfully depends on your Easton lifestyle. For some car owners, paying off a car loan early is a smart choice, while others may find that paying off a car loan early could put them in financial trouble. 

In short, if paying off a car loan early won’t hurt your financial situation, it’s likely a good idea, especially if there’s no penalty for you to do so. Let’s take a look at some situations where paying off a car loan early is and isn’t a good option:

You Should Pay Off Your Car Loan Early If…

  • You have no other debts besides your car loan.
  • There’s plenty of room in your budget to pay off your car loan.
  • You want to improve your debt-to-income ratio.
  • You want to save for other expenses and financial goals.

You Shouldn’t Pay Off Your Car Loan Early If…

  • You have to use your emergency savings to pay it off.
  • You have a low interest rate and you won’t pay much in interest over time.
  • You’re trying to build your credit history to potentially upgrade to a new Stoughton daily driver in the future.
  • There’s a penalty on your loan agreement.

How To Pay Off a Car Loan Early – Set Yourself Up for Success

If you’ve determined that paying off your car loan early is right for your needs, there are a couple of different ways you can go about it. Here’s how to set yourself up for success to pay off your car loan early:

  • Bi-Weekly Payments: Some lenders won’t allow this, so you’ll want to confirm yours does before you do this. But, making bi-weekly payments will essentially result in you making 13 full monthly car payments every year versus the 12 full monthly car payments. That additional payment can help you pay your car loan off quicker.
  • Round Up: Round up the amount you’re paying to the nearest $50 when you’re making your car payment. 
  • Extra Lump Sum Payment: If you’re good at saving, you can always make an extra lump sum payment once a year to help pay off your car loan early.
  • Refinance: There may be some situations where refinancing can help you save in the long run thanks to a lower interest rate. When you apply for financing with us, we do our best to ensure that you’re getting the best interest rate possible. But, if you’ve financed your vehicle at a different institution in the West Bridgewater area, it may not hurt to check elsewhere if there’s a better interest rate available.

We Can Help You Learn How To Pay Off a Car Loan Early at Silko Volkswagen!

If you’re still not sure about how to pay off your car loan early, be sure to give us a visit in Brockton. We’ll be more than happy to go over your financial situation and help you understand everything you need to know about paying off a car loan early. Reach out to us today to get started!

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