How do I pay off my new car loan?

I have a 60-month loan that still has a year left, but I want to pay it off early. How do I go about this?

Answer
If you want to pay off your car loan a year early, the process is relatively simple. Since you have the cash in hand, simply call or email your lender and request a payoff letter. This letter shows the exact amount of money you need to pay off the loan, including all accrued debt, any missed payments, or other fees. Cut them a check for this amount and you’re done.
But before you do that, make sure to ask about any prepayment penalties. If your loan doesn’t have any, you’re golden. If it does, you should weigh the amount of the prepayment penalty against what you would pay in interest over the remainder of the loan.
You may also want to factor in the cost-savings of insurance, as you can select cheaper car insurance if you pay the car loan off. Lenders require full coverage for a financed vehicle, but once you pay off your loan, you won’t be required to have full coverage anymore.
If you want to get an idea of how much you can save on car insurance, it never hurts to look at quotes, and Jerry can help you do just that. Jerry compares personalized quotes from more than 50 top providers, including Nationwide, Allstate, and Travelers, and delivers the best deals to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!
Eric Schad
Answered on Nov 23, 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.
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