What will happen after you pay off your car loan?
I only have two months left on my car loan, and having some extra cash every month will be a huge relief. But honestly, I don’t know what happens when I make my last payment. What happens after you pay off your car loan?
Paying off your car loan is a significant milestone, and you should feel proud!
In terms of what happens after you pay off your car loan, you gain full ownership of the car and don’t have to do much except make sure the lien has been removed from your title. Also, you should notify your car insurance company of the change.
The process to remove the lien and get your free and clear title varies by state, as well as who holds the title. But it shouldn’t require more than a bit of patience and a possible trip to the DMV.
- If you currently have the title, you likely live in a non-title-holding state and will have to visit the DMV to have the lien removed.
- If the lender currently has the title, you likely live in a title-holding state and should be mailed a free and clear title within a few weeks. Occasionally, the lender may send the old title and a lien release document. In that case, you would need to visit the DMV.
You should notify your insurance company once your title is squared away because your rate will likely be adjusted. If you’d like, you can now drop your comprehensive and collision coverage—although they are wise to keep if you can afford it.
If you want to ensure you’re not overpaying for your coverage, use Jerry, an insurance comparison app that shops for low prices with over 50 insurance companies for free. Once you select a new policy, Jerry does all the paperwork for you and even helps cancel your old policy! And if you ever have any questions, agents are just a text away.
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