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Can I Pay Off My Car Loan Early?

Man Giving Thumbs Up Holding Keys In Car
Is it good to pay off a car loan early, or should you stick to your original payment plan? If you can afford to make higher payments, eliminating your auto debt more quickly can save you money on interest and improve your financial health. However, keep in mind that some loan agreements will charge you a fee for paying off your loan before the end of the term. Learn how to pay off a car loan early in this guide from the auto finance experts at Ryan Chrysler Jeep Dodge!

When is Paying Off a Car Loan Early the Right Choice?

Is it good to pay off a car loan early, or not? It depends on your financial situation and the terms of your loan agreement. Here’s what you need to know about how to pay off a car loan early:

  • Looking to save on interest? If you pay more than necessary each month, you’ll shorten the time that you’re paying off the loan and owe fewer interest payments as a result.
  • It is good to pay off your car loan early if you can easily afford it, but not if it’s a strain on your budget. If your budget is too tight with the higher loan payments, you risk resorting to credit for unexpected expenses.
  • Is it good to pay off a car loan early in order to raise your credit score? Actually, your score will get a bigger boost if you leave the loan open for the full term. Paying off a loan early causes your available credit to drop abruptly. If that happens, you’ll be using a much larger percentage of your available credit. Known as credit utilization rate, this figure has a major impact on your credit score.

How to Pay off a Car Loan Early and Avoid Interest

If your goal is to pay less in interest over the course of your loan term, then paying off your loan early can help. You might also pay early if you want to open up space in your budget for a down payment on a new car in Watford City, or for another expense. Whether you use it to purchase a new car or not, trading in your current car will put extra money in your pocket.

Explore Your Auto Lease and Finance Options in Williston

Car financing can be complicated, but our goal at Ryan Chrysler Jeep Dodge is to make the process fast and hassle-free. Contact us today to discuss your auto loan options in Dickinson with an experienced finance expert, and stop by to see how much you can save with our new vehicle special offers! We’re conveniently located in Ryan Chrysler Jeep Dodge Williston, just a short drive from Dickinson.

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