Does paying car loan early save money?

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asked Apr 14 in Buying & Selling by CaterpillarSick (300 points)
Does paying car loan early save money?

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answered Apr 14 by LindaHartzell (4,830 points)
Paying off a car loan early can save you lots of money in interest charges because when you have a car loan you pay interest to the finance company who lent the money to you to pay for the car.

The finance company makes it's money by charging you interest on the car loan so when you pay off the car loan early you save money in those interests charges that you would've paid over the life of the car loan.

But when you do pay off the car loan early you'll usually be charged a fee for an early pay off of the car loan but the early pay off fee is usually cheaper than paying the interests charges on the loan over the life of the loan.

So you do save some money on the loan through the savings in interests charges.

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