Can you pay off a car loan early?
Can you pay off a car loan early? What are the pros and cons? I want to pay my car loan off early, but I'm not sure if it's the right move.
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Answered on Jul 01, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
“Most lenders allow you to pay off a car loan early.
However, you should be aware that some may charge a prepayment penalty.
Some of these penalties are so stiff that there’s no advantage to paying your loan off early, as the penalty is more than the amount of interest charged.
As far as paying off the new car loan, you can save yourself on interest over the life of the new car loan, provided there are no prepayment penalties.
Conversely, the downside to paying that off is a hit to your savings; but if you can afford it, it’s a smart move.”
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