What are the advantages of paying off a car loan early?

I have some extra cash and I was thinking about paying off my car loan. What are the advantages of doing so?

Answer
Paying off your car loan early is a great way to save money on interest and add a bit of financial security to your life. Some of the top advantages of paying a car loan off early include:
  • Lowering your debt-to-income ratio
  • Avoiding negative equity, or being upside down on the loan
  • Saving money on interest
  • Money for other expenses or savings
However, you should weigh this against the disadvantages of paying off the loan early, which may include:
You will ultimately have to make the final decision. Whatever you choose to do, make sure you’re not overpaying on car insurance. Use the number-one-rated car insurance app, Jerry, to make sure you’re getting the best deals. Jerry compares personalized rates from more than 50 top insurance companies 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 24, 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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