Is Paying Off a Car Loan Early a Good Idea?

Is it good to pay off a car loan early? If you’ve been wondering, “Can I pay off my car loan early?”, like a lot of our Lawrenceville customers, ourfinance center is here to help. Let’s take a look at the pros and cons of paying off a car loan early, as well as how to pay off a car loan early.

When Paying Off a Car Loan Early May Be Right for You

Is it good to pay off a car loan early if you have the funds to do so? That depends on the factors below.

Paying off a car loan early is a good idea if:

• You would like to free up money for other expenses.
• Making larger monthly car payments won’t affect your emergency funds and other finances.
• You would like to lower your monthly expenses to plan for a larger financial goal, such as entering retirement or growing your family.
• You need to improve your debt-to-income ratio.

When Paying Off a Car Loan Early Isn’t Right for You

Sometimes, the question isn’t, “Can I pay off my car loan early?”, but “Should I?”

Is it good to pay off a car loan early in every case? The truth is, It doesn’t make sense for all of our Suwanee customers. You may want to reconsider if the following is true.

Reconsider paying off a car loan early if:

• You can’t afford to make extra or higher car payments.
• You have a low interest rate and the money you’d use to pay off your loan early could be better used to create a retirement fund or for a future financial goal.
• You need to build your credit history.
• Your loan agreement includes a large prepayment penalty.

How to Pay Off a Car Loan Early

If you’ve decided the right answer to the question, “Can I pay off my car early?” is “Yes,” consider doing it in one of the ways below:

How to pay off a car loan early

• Make one extra payment per year.
• Make Bi-Weekly, instead of monthly payments – results in one extra payment a year.
• Round up your monthly payment to the nearest $50.
• Do not skip a payment.
• Refinance your car loan if you can get a better rate. With a lower rate you can afford to make higher or extra payments. 

Talk to the Finance Department at Rick Hendrick Chevrolet Duluth of Duluth

Our finance managers would be happy to walk you through the pros and cons of paying off a car loan early. We make financing simple at Rick Hendrick Chevrolet Duluth. You canapply for credit or evenvalue your trade online. We’re just a short drive away from Johns Creek. So, drop by or contact us today!