What is car loan curtailment?

I was looking at my car loan contract and I saw the phrase “curtailment.” What does this mean for my car loan?

Although the term is used far more often for mortgages than for car loans, curtailment refers to paying off all or part of a loan ahead of schedule. This means that you pay more toward the principal of your loan each month, or maybe you pay the entire loan off in one go.
If you don’t have a curtailment option, be sure to check with your lender before you begin making early or extra payments. Some lenders charge prepayment penalties, which are a 2% to 4% surcharge for making payments early.
As you budget out your car loan, make sure you’re not overpaying for your car insurance. Use Jerry to compare dozens of competitive quotes (this is totally free!) and switch policies in-app.
Eric Schad
Answered on Oct 21, 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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