The Forbes Advisor editorial team is independent and objective. Related: How To Get A Car Loan With Bad Credit You might have other debt with a higher interest rate that you should focus on paying down first.So, if you plan to take out another loan soon, like a mortgage, you might want to hold off on paying off the car loan until after you’ve secured the new loan. Your credit score could temporarily dip when the loan is closed out, which automatically happens when the loan is paid off.Your lender might charge a prepayment penalty, so check with them before deciding to pay off the loan too soon so you don’t owe more than planned.There are also some risks to keep in mind when deciding whether or not to pay off your car loan early: You’ll own your vehicle free and clear, so you’ll be able to sell it if you need to and/or more easily buy yourself a new vehicle if that is your goal.You’ll pay less in interest over the life of the loan.You’ll have more money in your budget every month.There are some notable benefits to paying off your car loan earlier than expected: Total interest savings: The amount you’ll save in interest if you make the additional payments suggested by the calculator.īenefits of Paying Off Your Car Loan Early.Loan term shortened by: The number of months your loan would be reduced by if you increased your payment amount.
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