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What happens when I pay off my car loan?
I have two payments left on my 60-month car loan and I’m pretty excited about the prospect of being debt-free. I’m also a little stumped. What actually happens when I pay off my car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Paying off your
car loan
is a great feeling! And while it may be freeing, you aren’t in the clear yet. Once you’ve paid off your loan, remember to get a clear title and take care of your car insurance
.Once you pay off your loan, the car becomes 100% yours—so you’ll need to retitle your vehicle. Forty-one states require the lender to send you a lien release and all the necessary paperwork to retitle the car. Just fill it out, turn it in to the DMV, and they’ll give you a new title! In the other nine states, the process is the same—but you’ll need to ask your lender for the lien release.
When you pay off the loan, you also need to alert your car insurance company of the change. While this shouldn’t impact your premium, it’s a good opportunity to reassess your insurance needs.
For help exploring your insurance options and finding better rates, try
Jerry
. A licensed broker, the Jerry app can help you compare quotes from over 50 top providers like Nationwide and Progressive for free. Jerry customers save an average of $879 a year—and it only takes a minute to sign up!MORE: Checklist for switching car insurance companies
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- Gregory R.
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