Is Paying Off a Car Loan Early Possible?

When you first applied for financing on your current Norwalk daily driver, your financial situation may have been different from what it is now. If you find that your financial situation has changed for the better, it may be worth it to look into paying off your car loan early.

But, is it possible to pay off a car loan early? Yes! Paying off a car loan early is possible but there may be nuances that you’ll want to be aware of. Fortunately, our finance experts are here to help. Learn all about paying off your car loan early today with Mercedes-Benz of Fairfield and continue reading below to have these questions answered:

• When does it make sense to pay off a car loan early?
• Is it good to pay off a car loan early?
• What are the steps on how to pay off a car loan early?

When Does It Make Sense To Pay Off a Car Loan Early?

Now that you know paying off a car loan early is possible, it’s important to keep in mind that it’s not right for every Westport lifestyle. There may be some instances where it won’t make sense for you to pay off your car loan early. Let’s take a look at some instances where it does and doesn’t make sense to pay off your car loan early:

Is It Good To Pay Off a Car Loan Early? The Answer Is Yes If…

• You have no other debt to worry about and you want to be debt free.
• You have the extra funds to pay off your car loan without dipping into your emergency savings.
• Your finances have changed since you first financed your vehicle and you’re working towards another financial goal.
• You need to improve your debt-to-income ratio.

Is It Good To Pay Off a Car Loan Early? The Answer Is No If…

• You don’t have an emergency fund.
• You’ve got a low interest rate on your car loan.
• You’re trying to build your credit history.
• Your car loan has an early payment penalty.

How To Pay Off a Car Loan Early – The Different Ways You Can Do It

Whether you’re looking to upgrade to a new vehicle for your Weston commute or you simply want to be debt-free and paying off your car loan early is a good fit for your lifestyle, there are multiple options you have as far as paying off your car loan early. Just keep in mind that some lenders may not allow for early repayment so check with your specific car loan provider first before proceeding. With that out of the way, here’s how to pay off a car loan early:

• Round Up: For every monthly payment you make, round up to the nearest $50 and eventually you’ll pay off your car loan earlier than you were supposed to.

• Bi-Weekly Payments: Split your monthly car payment into two and make that split payment amount every two weeks. With this method, you’ll eventually be making 13 full payments a year instead of 12.

• Lump Sum Payment: Make an extra lump sum payment once a year if you’ve got the extra cash.

• Refinance: Although not necessarily the same as paying off your car loan in full, refinancing may be a good option to consider if you’re looking for a lower interest rate. A lower interest rate typically means a lower monthly payment but if you continue to make the same payments, even with a reduced monthly payment amount, you’ll eventually pay off your car loan earlier.

We Can Walk You Through Paying Off a Car Loan Early at Mercedes-Benz of Fairfield!

If you need help with paying off your car loan early, be sure to visit our finance center in Fairfield. We’ve been in the business for a long time and we’ve got the expertise to assist you. Let us know how we can help you today!