For many borrowers, paying loans is something that becomes just one of those things that you do. However, after a few years, many seek relief from the monthly payments. If you’ve found yourself with a recent bonus, new job, or any other major change to your financial status, you may be considering cashing in that check and paying off your car loan early. Many borrowers are curious about how they can pay off their loan early, if they’re allowed to pay it early, and what happens after they do. We’ve put together this guide to the steps you can take to get your car loan paid off early.
Are There Negatives to Paying Off an Auto Loan Early?
Aside from a potential dip in credit score, there aren’t many negatives when it comes to paying off an auto loan early. Paying your loan off early eases the stress of monthly payments and it’s one less thing you have to worry about. Closing loans can temporarily cause a dip in a borrower’s credit score, though, so if you are looking to keep your credit on the escalator up, then it would be in your best interest to keep the loan open. Additionally, some lenders don’t make it easy for borrowers to pay their loans off early depending on the terms and conditions set at the time of approval. Always be sure to check that your lender does not have any prepayment penalties in place that could land you with a fee if you pay off the entire loan ahead of schedule.
Steps to Take to Pay Off a Car Loan Early
Looking past any potential negatives, paying off a car loan early can be freeing and can help you take major steps forward financially. Whether you are looking to make a future purchase, are trying to build your savings, or are simply trying to rid yourself of too many monthly payments. Paying off your car loan is a great start. Here are a few easy steps you can take to get ahead of your payment schedule and pay your loan off early:
- Split your monthly payments in two, paying half of your set payment every two weeks.
- Round your monthly payments up to the nearest $20, $50, or $100.
- Make one large additional payment every six months or once a year.
- Never skip a monthly payment.
- Refinance the loan for a better interest rate.
We work hard to make sure every i25 Kia customer’s loan sets them up for success, whether they purchase new or pre-owned. Our finance team is here to make sure you have the best possible car loan package. Additionally, customers can build and adjust their payment at i25kia.com on new and pre-owned vehicles. If you are looking for help paying off a car loan early and are in need of advice, don’t hesitate to contact our team.