Is there a penalty for paying off a car loan early?

+1 vote
asked May 23, 2018 in Buying & Selling by Sabelie98 (840 points)
Is there a penalty for paying off a car loan early?

1 Answer

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answered May 24, 2018 by Adf289 (35,200 points)
Most auto loan finance companies will indeed charge you a fee "penalty" for paying the car loan off early.

The auto loan finance company wants you to continue to make the payments so that the car loan company can make that interest on the car loan.

So if they can't get their interest from you through the long term payments of the car loan then they'll most likely charge you a penalty for paying off the auto loan early.

It's also a great idea to keep the car loan until the full term of the loan is up and continue to make the payments as having an open and in good standing car loan or other loan helps to build your credit over time and shows that you're a good risk for another loan.

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