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?
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!
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Read advice from car experts at Jerry
Browse by topics
What others are asking
What should you avoid when teaching someone how to drive?
I'm teaching my oldest child how to drive, as she just got her learner's permit. The only problem is that I've never taught anyone to drive. I have a basic idea of how to do it based on my own experiences, but what should I avoid telling her when I'm teaching her how to drive?
Nov 23, 2021
What's the minimum credit score needed for a car loan?
I want to get a car loan, but I only have a 575 credit score. Is that good enough? Is there a minimum needed?
Nov 23, 2021
How much does it cost to add a driver to my insurance policy?
My son just turned 16, and now has his license. We will be sharing my vehicle, for the time being. How much is it going to cost to add him to my insurance policy?
Nov 23, 2021