Can I Pay Off My Car Loan Early?

Finance Agreement
 

When you finance your new Buick or GMC with an auto loan, you will have a set monthly payment that must be made in order to avoid fees and other consequences. Can you pay off a car loan early? Paying off a car loan early is a great way to save money on interest and establish equity, however, there are some factors to take into consideration beforehand. Learn more about how to pay off a car loan early in this guide from the finance team at Albrecht Buick GMC of Wakefield in Wakefield.

 

 

Is it Good to Pay Off a Car Loan Early?

Can you pay off a car loan early? Yes, if your budget allows it. What are the benefits of paying off a car loan early? Some of the key advantages of an early car loan payoff include lower interest paid overall, reduced debt-to-income ratio, and a decreased likelihood of becoming upside-down on your loan. Here are a few things that Stoneham-area drivers like you should consider when looking at paying off a car loan early.

When Paying Off a Car Loan Early Makes Sense

  • You do not have other major debts to pay down or additional significant monthly expenses.
  • There is enough wiggle room in your budget to contribute more to your auto loan without drawing from your emergency fund or other savings.
  • You want to pay off the auto loan to free up money for your next financial goal.
  • You want to achieve financial freedom and eliminate your debt.

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

  • You don’t have the additional funds to increase your monthly car payment.
  • You have a low interest rate, so paying more toward your auto loan won’t save you terribly much in the long run.
  • Your on-time monthly payments are building your credit history or raising your credit score.
  • Your loan agreement includes pre-payment penalties.

How to Pay Off a Car Loan Early

If paying off a car loan early seems like a good option for you, there are three basic methods for how to pay off a car loan early:

  • Make Bi-Weekly Payments: By making payments every other week instead of once a month, you will end up making 13 full payments each year rather than 12.
  • Increase Your Monthly Payment: Pay $50 or $100 more on each monthly payment.
  • Pay an Additional Lump-Sum Each Year: Make one large extra payment each year to achieve the same interest savings.

Explore Your Auto Financing Options at Albrecht Buick GMC of Wakefield

Now that you have a good idea of how to pay off a car loan early, the experts at Albrecht Buick GMC of Wakefield will be happy to help you further explore your auto financing options. Our goal is to ensure that our valued customers throughout the Lynnfield and Medford area secure the loan or lease that is the best fit with their financial needs. If you have any questions, please get in touch with our team for more auto financing advice.

 

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