7 tips to pay off your car loan early + Prepayment fees to consider

Can you pay off your car loan early?

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Find out if you can save time and money by repaying your car loan early.

Car loans can help you get on the road when you don’t have the cash to buy a car outright. But if you’re in a financial situation that allows you to pay off your car loan, what’s stopping you? There are a couple of things to consider before you pay your car loan off early.
car.Loan.com Car Loans

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    How do early repayments work?

    Before you take out a car loan, check with the lender to see what penalties or fees it could charge for early repayment. Many car loans are secured — using your car as collateral — and come with a fixed interest rate. In this case lenders place restrictions or fees on early repayments — or won’t allow it at all.

    There are two different approaches for early repayments:

    • Repaying your entire loan on a variable rate loan. You’ll find fewer restrictions with a variable rate loan. You can typically repay the loan balance without worrying about termination fees — as lenders won’t lose much money from an early repayment.
    • Repaying your entire loan during a fixed rate period. This is where you’ll find the most restrictions. Repaying your entire loan involves paying whatever the loan balance is due to the lender during a fixed-rate period. Here you’ll likely pay termination and administration fees to apply to help the lender cover the loss on interest.

    What lenders let you pay off your car loan early?

    Loan ProviderCan you repay loan early without penalty?Fees that apply for early repayment
    Auto Credit ExpressVaries by lenderVaries by lender
    car.Loan.comVaries by lenderVaries by lender
    LendingTreeVaries by lenderVaries by lender
    CarsDirectVaries by lenderVaries by lender
    Bluesky Auto FinanceNot statedNot stated

    Compare car loans and get a quote today

    Rates last updated September 21st, 2018

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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Minimum Credit Score Term of Loan Requirements
    car.Loan.com Car Loans
    Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
    Varies by lender
    Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
    Auto Credit Express Car Loans
    Get connected with an auto lender near you, even if you have bad credit.
    Typically 3 to 6 years
    Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
    LendingClub Auto Refinancing
    Lower your monthly car payments and save on interest through a fast and easy online application process.
    Fair or poor credit
    Minimum of 2 years
    Car must be less than 10 years old with fewer than 120,000 miles. Current loan must have a balance between $5,000 and $55,000 and at least 24 months left in its term.
    MotoRefi Car Loan Refinancing
    A car loan connection service for borrowers looking to refinance.
    1–6 years
    Must have an income of at least $2,000/month and have a vehicle with less than 100,000 miles.
    myAutoloan.com Car Loans
    Get up to four offers in minutes through one simple application. Multiple financing types available including new cars, used cars and refinancing.
    24 to 84 months
    Must have a Social Security number; make $24,000+/year; have no open bankruptcies.
    LendingTree Auto Loans
    Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
    Typically 1 to 7 years
    Must be a US citizen and 18+ years old. Must have good to excellent credit.
    Capital One Auto Financing
    You could qualify for a car loan of up to 40000, but not all dealers accept this bank's financing.
    Good to excellent credit
    36 to 72 months
    Valid street address; existing Capital One accounts in good standing. Car must be a 2006 model or newer with less than 120,000 miles.
    Wells Fargo Auto Loans
    Auto loans with high loan amounts to cover your car purchase or refinancing needs.
    Good to excellent credit
    1 to 6 years
    Your income and assets must support your existing debt obligations and the desired loan amount.

    Compare up to 4 providers

    Strategies to pay off a car loan early

    • Refinance your loan. If you find yourself in a better financial position, with a strong credit score, you could refinance your loan to get a shorter term with better rates, paying off your debt in a fraction of the time.
    • Additional payments. If allowed, try to make additional payments whenever possible. Making payments every other week adds one extra payment at the end of the year, helping you save on interest.
    • Lump sum payments. Try to make a few large payments per year when you get extra cash from a bonus, tax refund or pay raise.
    • Get a night job. It may not be ideal, but working a few extra hours at night for some side cash can add up quickly. Plus, the hours spent working eliminates any free time you’d have to spend it.
    • Renegotiate your car insurance. There could be additional savings if you start comparing other car insurance options.
    • Sell your stuff. Make a list of personal items that you haven’t used in a long time and determine if you need them anymore. You may find that they’d be better as cash in your hand then taking up space in your home.
    • Don’t skip payments. Even if a lender allows you to skip a payment, it’s not advised because you’ll accrue interest.

    What else should I know about car loan payments?

    Your car loan payments will affect how you deal with your loan, so examine them carefully. Before you send a new loan application, make sure you’ve considered:

    • How often you make payments. Lenders usually give you the option of making payments weekly, twice a month or monthly — this helps you figure out a budget.
    • The flexibility of the payment options. Check if you’re able to make additional payments without penalty or if there’s a cap on how many additional payments you can make.
    • How you’ll make payments. Payments are usually drawn out of your bank account with autopay, but you may be given other options to pay off your loan.

    Bottom line

    Making additional repayments on your loan can be a helpful option that can help you save down the road, but it’s not the only feature that lenders have to offer. Remember to compare car loans, taking into consideration fees, features and rates to find the right one for you.

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