Why would a car loan payoff be higher than the balance?

I want to pay off my car loan, so I requested a car loan payoff statement. However, the payoff amount is more than my balance. What’s going on?

Answer
This may come as a shock, but a payoff letter will always be higher than the balance of your car loan (or any other loan). Here’s why.
A payoff letter always includes added interest from the day you requested it. Essentially, the lender is asking for the balance plus interest—which is exactly what you owe them.
If you’re able to pay off the amount indicated on the letter, congratulations! You’re all done with your car loan. Make sure to keep the letter as proof that you own the car in its entirety.
When you’re finished paying off your loan, you may want to switch your car insurance to reflect the level of coverage you (not your lender) want. Jerry can help you compare competitive quotes to find an affordable policy with the protection you need.
Eric Schad
Answered on Oct 20, 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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