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"What is the best way to prepay my car loan? "
"I recently came into some cash and can now afford to pay off my car loan in full. If I put this money towards the car loan, I will end up saving about $4k in interest payments. I am wondering if it would be wise to pay in full and just be done with it or if I should leave a small balance to reduce my monthly payments and keep building my credit score?"
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“This is a matter of preference and is completely dependent on what you want to accomplish. If you want to own your car outright so you can sell it anytime you want, then go ahead and pay the car off. The dip in your credit won’t be big enough to affect your ability to get financing for another car.
If you are simply trying to reduce your monthly outflow, then either way should work. Personally, I think I would just pay the whole thing off and save as much money as possible.”
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- Gregory R.
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