Should I Pay Off My Car Early?

Paying off an account or getting rid of a bill is an amazing feeling. If you have the cash right now and are looking to get rid of your car payment it may seem like a no-brainer to pay off the loan immediately – but should you?

Having fewer bills is everyone’s financial goal. If you have the opportunity to pay off your car loan early why not take it? Before you do so make sure you read the fine print of your loan agreement and take a look at your full financial picture. You want to make sure you use that chunk of money to make the biggest impact on your financial life.

Do You Have Prepayment Penalties?

Before you pay off your loan make sure that your particular loan does not contain a prepayment penalty. Some car loans contain prepayment penalties that will assess a fee if you try and pay off the balance of your loan early. Make sure your agreement does not contain one of these before you pay off your loan.

Do You Have High Interest Debt?

What kinds of other debt could you pay off before you car loan? The best strategy in getting rid of debt is to go after the loan with the highest interest rate first to save you some money. Even if you can’t pay it off in full, making a big payment against an account with a high interest rate is definitely a worthwhile thing to do.

If Not, Go For It!

If you can pay off your car loan in full and don’t have other high interest debt then go for it! The advantages of paying off your car early are many including getting rid of a monthly bill, freeing up some cash in your budget, and taking ownership of your vehicle sooner. Additionally by paying off a loan early you save on months or even years of accruing interest. That could add up to hundreds or even thousands of dollars.

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