Why should I pay off my car?

I was thinking about paying off my car because I received a big bonus. I thought about paying off my car, but I wasn’t sure if this would be a good idea in the long run. Should I pay off my car early?

Answer
Bonuses are a welcomed addition to your income!
Using your bonus to pay off your car loan can be a good idea. When you pay off your car loan early, you can reap numerous benefits, including:
  • Lowering your debt-to-income ratio
  • Having more money for other expenses
  • Having financial flexibility
  • Getting positive equity in your car
However, paying off your car loan early can also come with some drawbacks, such as:
If you decide to pay off your car loan, don’t forget about double-checking your insurance policy. Since you paid off the loan, you can choose to switch your coverage to a lower amount or maintain full coverage. To get the best rate for the coverage you choose, use the Jerry app. Download Jerry and compare quotes from up to 50 insurers in just minutes.
Eric Schad
Answered on Nov 04, 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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