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Can I Pay Off My Vehicle Loan Early?

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Is it good to pay off a car loan early? That answer depends on the dealership, as some dealers have penalties for paying off an auto loan early. You want to ask the dealership when leasing or buying a vehicle beforehand. However, it will be in your contract, so review everything carefully. If you pay off a car loan early, there are both pros and cons. 

With that said, in short, yes, Newport, RI drivers can pay off their loan early. At MINI of Warwick, we believe in transparency and want you to confidently drive away knowing everything you need to know about your auto loan. We hope our information will help you in whether you pay off your car loan early or not. Contact us for more details.

Is It Best to Pay Off a Vehicle Loan Early?

Is it good to pay off a car loan early? Yes, for the most part, paying off your auto loan is beneficial. Therefore, you can reduce financial stress and the chance of an upside-down car loan. 

The Pros to Paying Off an Auto Loan Early 

As we said, there are pros and cons to paying off a car loan early. Here are the pros:

  • Free yourself financially from one of the highest items you will ever pay for in your life. Cranston, RI drivers can choose to use the money towards other bills.
  • You acquired additional funds that do not have you dipping into your savings.
  • Intend to lower your debt-to-income ratio

The Cons to Paying Off Your Car Loan Early

  • You used your savings to pay off the debt.
  • You have a great interest rate that makes your vehicle affordable.
  • You do not have an emergency fund.
  • Paying off your car will not increase your credit score.
  • There may be a penalty if you pay your car loan early. Be sure to check with your Providence, RI-area lender!

How to Pay Off a Vehicle Loan Early

There are many ways to pay off your auto loan. Before you make any additional payments, we recommend consulting your lender. Here are some available options to pay off a vehicle loan early:

  • Bi-Weekly Payments: Make your car loan payments bi-weekly and pay thirteen months instead of twelve.
  • Round-Up Monthly Payments: Instead of paying the amount with change, round up your amount to the nearest fifty dollars, etc.
  • Make One Extra Yearly Payment in One Lump Sum: Make a large one lump sum payment to continue with the same interest.
  • Avoid Skipping a Payment: Avoid skipping a payment, even if the lender allows; it adds more interest to your car loan or extends your loan term.
  • Refinance with a New Vehicle Loan: Find out if you can refinance your vehicle. Keep in mind that you only want to refinance your auto loan if it lowers your interest rate. 

Learn More From MINI of Warwick Today!

If you pay off a car loan early, it can benefit you financially. However, you want to keep these points in mind and do your research before sending any money to your lender. Our finance team can help you further in Warwick. You can also apply for financing online with us!

Check out our car tips and tricks to help improve your car-buying experience!

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