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Who is affected if I pay my car loan off early?
I financed with a dealership to get incentives on a new car, but I have the money to pay off the loan. Because they've been awesome to work with, I don't want to negatively impact them by paying the car off early. Who is affected if I pay my car loan off early?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“The commissions and kickbacks earned by dealers through financing may have stipulations about how they get paid.
Most commonly, you have to hold the
car loan
for at least 90 days for the dealer to get its commissions. If you have the loan for less than 90 days, the payoff may impact the sales manager and possibly the salesperson. If you can stomach three car payments before you pay the loan off, you’ll be doing them a favor monetarily.
However, you have to remember that it is a business. If you don’t want to make monthly payments and there is no
prepayment penalty
in your contract, you shouldn’t feel obliged to keep the loan. If you do payoff the loan early and cost the dealers their commission, you might burn a bridge with them. It’s a good idea to stay in your dealership’s good graces so you can return to them for any warranty and maintenance work.
Should you decide to pay off your loan early, you’ll want to reevaluate your insurance. Lenders require full coverage. Once you pay off the loan, you can change your coverage, though with a newer vehicle it’s a good idea to keep higher coverage.
If you want to explore your insurance options after you pay off your loan, try using the free
Jerry
app. Jerry compares quotes from the top 50 providers and delivers the best deals to your phone in minutes.”View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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