Is Paying Off a Car Loan Early Right for You?

Maybe you’re tired of making monthly car payments and the interest that’s involved. Now, you’re wondering if there are benefits to paying off a car loan early. Is it good to pay off a car loan early? OurFinance Department has helped plenty of Ole Ben Franklin Motors of Alcoa customers just like you make sense of auto financing. Let’s take a look at the pros and cons of paying off a car loan before the term ends, as well as how to pay off a car loan early.

When Paying Off a Car Loan Early is a Good Idea

Is it good to pay off a car loan early if you can afford it? The short answer is yes, It can be, especially if the following is true:

Paying off a car loan early is a good idea if:

• You would like to free up money for other expenses.
• Making larger monthly car payments won’t affect your emergency funds and other finances.
• You would like to lower your monthly expenses to plan for a larger financial goal, such as entering retirement or growing your family.
• You need to improve your debt-to-income ratio.

When Paying Off a Car Loan Early Isn’t Right for You

Is it good to pay off a car loan in every case? It doesn’t make sense for all of our Alcoa customers. You may want to reconsider if the following is true.

Reconsider paying off a car loan early if:

• You can’t afford to make extra or higher car payments.
• You have a low interest rate and the money you’d use to pay off your loan early could be better used to create a retirement fund or for a future financial goal.
• You need to build your credit history.
• Your loan agreement includes a large prepayment penalty.

How to Pay Off a Car Loan Early

Have you decided that paying your loan off early is right for you? Then think about using one of these methods:

How to pay off a car loan early:

• Make one extra payment per year.
• Make Bi-Weekly, instead of monthly payments – results in one extra payment a year.
• Round up your monthly payment to the nearest $50.
• Do not skip a payment.
• Refinance your car loan if you can get a better rate.

Let the Finance Managers at Ole Ben Franklin Motors of Alcoa Help

We’ll be happy to answer any of your questions. We also make auto financing easy with our online tools. You canapply for financing or evenestimate your payment online. We’re just a short drive away from both Lenoir City and Sevierville. So, drop by our location in Alcoa or contact us online today!