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Can You Pay Off My Car Loan Early?

Tiny car with coins and finance paperwork

 

No one likes spending money every month when it comes to paying their car loan, and the thought often crosses the mind of Fairmont drivers of should I pay off your car loan early. If you’re preparing to pay off your car loan early and you want to make sure it’s the right course of action, then let our team at Dan Cava's Buick GMC make it easy. Our finance department can answer all of the questions you might have about paying off your car loan early, as well as how you can do so. If you have any questions, then contact us today, and we’ll answer them all promptly. 

Is it Good to Pay Off a Car Loan Early? 

For most Morgantown drivers, paying off a loan early is a good idea. After all, if you pay your loan off early, you’ll have less overall interest on your vehicle. To determine if it’s the right decision for you, review some signs that paying off a loan early is and isn’t a good idea: 

Pay Your Loan Off Early If: 

  • You don’t have more important debts to take care of, like unpaid credit card bills, personal loans, or any loan with higher interest rates than your current auto loan. 
  • You already have substantial savings and are covered in the event of an emergency. 
  • If you’re attempting to free up your budget, so you can plan for a bigger, more urgent financial goal. 
  • You’re trying to improve your debt-to-income ratio.

Consider Other Options If: 

  • You don’t have an emergency fund.
  • Your auto loan has a low interest rate, and the monthly payment is relatively gentle on your monthly budget. In this case, your money is probably better served if put towards your retirement savings. 
  • You’re attempting to build credit by reliably making payments on a large loan.
  • Your auto loan agreement stipulates that breaking your contract early will result in prepayment penalties. 

How to Pay Off a Car Loan Early

There are a few methods you can follow to pay off your car loan early. Take a look to determine which route makes the most sense for yourself:

  • Pay Every Two Weeks: If you make a payment every two weeks, rather than once a month, you make one additional payment each year. 
  • Round Up: Round up to the nearest $50 each time you make a payment.
  • Make Additional Payments: Next time you get a windfall, use some of it to make additional payments to speed up the process of paying off your loan. 
  • Refinancing: If you’ve made reliable payments on your car over the past two years, you’re likely eligible to refinance your car loan through another lender and bargain for a lower interest rate.  

Have Questions About Paying Off Your Car Loan Early? 

Whether you have questions about how to pay off a car loan early or you just want a second opinion on if it’s good to pay off your loan early, you can trust the team at Dan Cava's Buick GMC to make it easy to understand. We’ll work with you to make sure that you’re making the best choice for your budget and situation. You can also view our selection of car buying tips for additional finance and insurance information.

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