Can I Pay off My Car Loan Early?

Hands Doing Calculations with Calculator

You can absolutely pay off your car loan early! If you’re a Waco driver that wants to pay off your loan early, then learn some of the best ways to do it with the finance center at Allen Samuels Auto Group. Your vehicle will have a set auto loan when you finance, but we can help you adjust your payments. If you need help paying off a car loan early, then Allen Samuels Auto Group has the perfect guide for you.

How to Pay Off a Car Loan Early

Paying off a car loan early isn’t as complicated as you might think. Here are some of the strategies that you can implement to help pay off your car loan early:

  • Don’t Skip Payments: Although it can be tempting, try not to skip a car loan payment if you can. Many Aransas Pass lenders allow you to skip a payment or two without penalty, but it’s meant for emergencies only. Skipping a payment will make your loan term longer, meaning more interest.
  • Consider Refinancing: If you are able to refinance your car loan at a lower rate than what you currently pay, then this will lower your monthly payments, allowing you to put more money towards paying off your loan early. If you have a good payment history, then you will more than likely be eligible to refinance your loan.
  • Pay Bi-Weekly: Not all lenders allow bi-weekly payments, so check with your lender to see if it’s something that they allow. Paying twice a month instead of once will enable you to make thirteen payments every year instead of only twelve.
  • Round Up: Each month, try rounding up your payment to the nearest fifty dollars if you’re able to. This will increase the payment amount and will contribute to paying off your car loan early.
  • Make a Lump Sum Payment: If you don’t want to round up your payment every month, try paying a one-time extra payment every year that’s larger than your usual amount. This is known as a lump sum.

Now that you know how to pay off your car loan early, you don’t have to pick just one strategy. You can combine them to pay your loan off even quicker.

Should I Pay Off My Car Loan Early?

Is it good to pay off a car loan early? You’ll need a solid financial strategy, and you’ll want to meet with your local Hutchinson financial advisor to discuss that strategy. When you plan out your strategy, focus on tackling the overall interest paid, avoid becoming upside down on your loan, and lower the debt-to income ratio. To have a more concrete number, you can use our payment calculator at Allen Samuels Auto Group online.

When Does Paying Off a Car Loan Early Makes Sense

Sometimes, deciding if it is good to pay off a car loan early will depend on other circumstantial factors. Paying off a car loan early could be beneficial if the following is true:

  • Little to no other debt
  • Ample amount of savings
  • Plan to retire or grow your family
  • Trying to improve your debt-to-income ratio

However, paying off a car loan early can negatively affect other aspects of your current finances. It might not be a good time to pay off a car loan early if the following is true:

  • No emergency savings
  • Unreasonable interest rate
  • Trying to build or improve your credit

Some lenders have penalties for paying off the loan early, so you’ll want to check with them first to see if it’s something that’s allowed.

Get Your Finance Questions Answered at Allen Samuels Auto Group

Now that you know how to pay off a car loan early and how to decide if it’s the right time to do so, you can visit Allen Samuels Auto Group in Waco or online for all of your finance tips. Contact us to get a consultation from our finance team.

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