Can I Pay Off My Car Loan Early?

If you’re looking into paying off a car loan early, you probably have a lot of questions about how to pay off a car loan early and whether it’s good to pay a car loan off early. Read on for help with deciding whether early car loan payment is right for you and what steps you’ll need to take if you do decide to go forward with early repayment near Pelham. If you have questions along the way about your financing options, don’t hesitate to call the Performance Mercedes-Benz financiers in St Catharines at 905-685-3838 for help.

Is it Good to Pay Off a Car Loan Early?

If you’re considering paying off your car loan early around Niagara-on-the-Lake, the first step you’ll want to take is determining whether it’s a good idea for you. The perks include less overall paid interest, avoiding becoming upside down on your loan in the future, and a decreased debt-to-income ratio. These perks, however, are only worth it in the right situation. Read on for help with figuring out if paying your car loan off early makes sense for you:

Pay Your Car Loan Off Early If:

• If you don’t have other, more important debts to take of, and you’d like to pay off your car loan to open up your monthly budget
• You’ve saved a big enough emergency fund
• Your life is going to change in a way that affects how much money you need every month, i.e.: you’re having a baby, or you’re about to retire
• Your credit score is low because of your debt-to-income ratio

Don’t Pay Your Car Loan Off Early If:

• You haven’t saved up for a proper emergency fund
• Your auto loan has a good interest rate, and you find it easy to make reliable payments—a loan you can afford to pay off each month is good for your credit score
• You have debts with higher interest rates
• Your existing car loan has a prepayment penalty (check your loan agreement)

How to Pay Off a Car Loan Early

If you’ve determined that paying off a car loan early is right for you, find a strategy for early loan payment below that works well for you:

• Round Up Your Payment Each Month – Round up to the nearest $50 with each payment.

• Make Bi-Weekly Payments – Most of us make one payment on our auto loan each month. If you can divide that payment into bi-monthly installments, you’ll end up making thirteen full payments each year instead of twelve.

• Refinance with a New Car Loan – If you haven’t missed a payment on your car loan for 2 years, you’re a good candidate to refinance your loan with another lender. This is a great way to bargain for a lower interest rate.

Negotiate Paying Off Your Car Loan Early in St Catharines

Now that Pelham drivers have read about how to pay off a car loan early and have a better idea about whether or not it is good to pay off a car loan early given their financial situation, if they’re ready to take the next step, they can contact Performance Mercedes-Benz. Have other questions about car financing? Be sure to explore the other helpful reads on our site like our guide on deciding between leasing and financing and the value of extended warranties.