Is it a good idea to pay off a car loan early?

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asked Oct 19, 2018 in Buying & Selling by Yuri (280 points)
Is it a good idea to pay off a car loan early?

1 Answer

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answered Oct 20, 2018 by JkoNodes (370 points)
Paying off a car loan early if you have the money is a good idea only if you really want to get it paid off.

When you pay off a car loan earlier than the loan term you save money on interest over the years of the loan.

But do note that when you pay off a car loan early the lender may hit you with a pay off early penalty since the lender for the car loan wants you to keep the loan for the full term and that's how they make their money through the interest charged on the loan.

When the lender doesn't get their interest which is how they make money they will likely get some money by charging you an early payoff fee for paying the loan back early.

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