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Can I Pay Off My Car Loan Early?

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Are you one of the many Centerville drivers who want to learn more about paying off a car loan early? There are a few ways to make this happen, one of which is paying more than your monthly payment to pay off your vehicle earlier. So, let’s learn how to pay off a car loan early with the experts at Voss Hyundai today! For more information, feel free to contact us anytime!

Join our finance center to learn more about paying off a car loan early. Some of the topics discussed will include:

  • When paying off a car loan early is or isn’t a good idea
  • How to pay off a car loan early

Keep reading to learn more about how to pay off a car loan early, and check out our tips and tricks to help you achieve your goals.

Is it Good to Pay Off a Car Loan Early?

So, now you might be wondering, is it good to pay off a car loan early? Well, it depends, as you have to make sure you have the right financial plan to prevent becoming upside down on your loan and have a lower debt-to-income ratio.

When Paying Off a Car Loan Early Makes Sense

  • You have just a few debts or no debts at all, and you would like to pay off your car early to have more money available. 
  • You have saved up some extra money, and have enough available to put more towards your car payment. 
  • You want to decrease your monthly expenses to make sure you’re ready for anything the future might throw at you. One of the most common is wanting to expand your family or open a savings account.
  • You want to improve your debt-to-income ratio

When Paying Off a Car Loan Early Isn’t the Best Option

  • You have little money saved up for emergencies or other unexpected expenses. 
  • If you have good credit and received a decent interest rate, it would make more sense to just continue paying off the loan on the regular payment agreement. This will allow you to use the money you saved for other expenses.
  • If you’re trying to build your credit score by making timely payments, it might be better to continue on the current payment schedule.
  • Some car loan agreements include prepayment penalties. If your loan includes any type of prepayment penalties, you should continue making timely payments to prevent these penalties.

How to Pay Off a Car Loan Early

If you still want to find out how to pay off a car loan early, check out these different ways you could make this happen:

  • Make Bi-Weekly Payments – You should always consult with your lender to make sure you can use this method. For this, you should divide your monthly payment by two, and pay that amount every two weeks. Therefore, you will be making 13 payments annually instead of twelve. 
  • Round Up Your Payment Each Month – When you make a monthly payment, be sure to round it up to the nearest $50. 
  • Make One Extra Payment Each Year in One Lump Sum – If these two methods aren’t for you, you could always just make one extra payment each year. This will help you save the same amount of interest. 
  • Resist the Temptation of Skipping a Payment – Although some lenders allow you to skip a payment, it’s important to not do this, as it could extend the length of your loan and add more interest.
  • Refinance with a New Car Loan – If you’ve made a couple of years worth of payments on time, you could refinance to secure a lower interest rate. This will effectively lower your monthly payment, allowing you to pay more each month without breaking the bank, and pay off your loan sooner.

Secure Your Auto Financing with Voss Hyundai!

Now that you know more about paying off a car loan early, come visit us at Voss Hyundai to learn more. Check out our new vehicle inventory, and apply for financing to get the best deal possible around Dayton. Be sure to use our new vehicle specials to save big near Kettering!

 

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