Do most car loans have a prepayment penalty?
Do car loans typically have a prepayment penalty? I am almost finished paying off my loan, but I’m concerned about being charged prepayment fees. I don’t want to be subject to paying more than I need to.
Good question! Prepayment penalties are fees the lender charges when you pay off your loan early. Lenders charge prepayment penalties to gain back what they may be losing in interest had the loan followed the original repayment term. That said, not all car loans have prepayment penalties.
As every loan contract is different and terms vary, not all lenders charge these fees. Additionally, you’ll only face prepayment penalties if you pay your loan off earlier than expected. If you’re successfully finishing out your loan term and making normally scheduled payments, you shouldn’t face any additional fees.
Even so, it’s always best to check your loan contract or reach out to your lender for clarification.
Once you’ve paid off your loan, it’s a good idea to review the coverage on your car insurance. Lenders often require certain coverages, so you may be able to make changes once you’ve paid off your loan.
If you’d like to explore your options, use Jerry. The Jerry app can provide you with competitive quotes in under a minute. Jerry takes care of all the paperwork and phone calls and can even assist you in canceling your old policy!
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