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How do I pay off my car loan early?
I don't want to keep paying for my car for another two years. What are some ways to pay off the loan quickly?
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
For example, you can round your monthly payment up to the nearest hundred or make an extra payment every month. This way, you are putting more towards your monthly premiums and reducing the overall amount you will be paying in a quicker manner.
The strategy that can save you the most money is to save up until you have enough to pay the principal balance in full. If you choose to pursue this route, you will effectively be saving yourself from interest accrual if you were to make longer monthly payments.
Before picking a plan to pay a loan off early, though, you should talk to your lender to make sure there is no
prepayment penalty
.When you pay off a loan, your car insurance requirements change and you can potentially save even more money. Lenders require more insurance on a financed vehicle, so when you pay off your loan, it’s a good time to reevaluate your policy.
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