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Is it Good to Pay off a Car Loan Early?

Car Loan

 

No matter if you buy a new or pre-owned car for your Topeka drives, paying off a car loan early could benefit you in many ways. But only if you do it the right way. How to pay off a car loan early is relatively easy; you just have to answer a few simple questions to assess your financial situation. Let the finance department at Crown Volkswagen help you in paying off a car loan early! We can help you decide if it is good to pay off your car loan early, how to pay off a car loan early, and the times when you should save your money or spend it elsewhere. 

Is it Good to Pay Off a Car Loan Early?

We know you’re anxious to get away from paying your car loan. No one likes monthly payments when that could be money in your pocket. Are you ready to pay off your Kansas City car loan? Let’s find out by taking a look at when it’s a good time to pay off your car loan:

  • Your debt load is low and you’d like to free up money for other expenses or savings. 
  • Your savings contains an adequate buffer to get you through a financial emergency. 
  • You’d like to lower your monthly expenses and focus on saving for your family, education, or retirement. 
  • You’re looking to improve your debt-to-income ratio

When you’re learning how to pay off a car loan early, you’ll find there are times when you’re better off sticking to your monthly payments. Those situations are: 

  • You don’t have extra funds set aside for emergencies
  • You have an exceptionally good interest rate on your current loan. 
  • You need to build your credit score. 
  • Your loan includes early pay-off penalties. 

How to Pay Off a Car Loan Early

When you know the particulars of your auto loan, you can choose the best way to pay off a car loan early. Your options include: 

  • Make Bi-Weekly Payments – As long as your lender allows this, you’ll be able to make an extra payment each year. 
  • Round Up Your Payment Each Month – Rounding to the nearest $50 is reasonable. 
  • Make One Extra Payment Each Year in One Lump Sum – This is a good option if you receive an annual payroll bonus. 
  • Refinance with a New Car Loan – When you’ve had your car for a couple of years, see if you can improve your interest rate by refinancing. This will save you money in interest every month, helping you pay off your vehicle faster. 

Learn More with Crown Volkswagen!

When you shop with Crown Volkswagen, take advantage of all we have to offer, starting with our collection of finance and insurance information. Our team of finance professionals wants to make it affordable and easy for you to get into your next new car!

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