Paying Off Car Loan Early with Bell Road Mitsubishi

Drivers in Glendale that have purchased a vehicle from Bell Road Mitsubishi are most likely going to have an auto loan with a monthly payment that must be paid off before they can fully own their vehicle. However, you might be wondering if it’s possible to pay your car loan off early, and that’s where the team at Bell Road Mitsubishi comes in handy. We’ll help you find out is it a good idea to pay off a car loan early, as well as how the process actually happens. Below the team at Bell Road Mitsubishi will walk you through the steps, and then show you more car buying information to make the right loan decision for your needs to take home a used Ford.

Is it Good to Pay Off a Car Loan Early?

It requires a lot of diligence and planning to pay off your car loan early, but the benefits are worthwhile for many Peoria drivers. Your interest payments will be lower overall, and you will lower your chance of going upside down on your loan. Paying your car loan off early also will lower your debt-to-income ratio, and increase your financial freedom.

When To Pay Off a Car Loan Early

• If you don’t have any other debts, paying your car loan off early could free up your money for expenses.
• With extra funds saved up or some wiggle room in your budget, making larger monthly car payments shouldn’t affect your emergency funds and other finances
• If you want to lower your monthly expenses to plan for a larger financial goal, like buying a house or growing your family
• You want to improve your debt-to-income ratio

When NOT to Pay Off a Car Loan Early

• • If you don’t have extra funds
  • If you have a great interest rate, it may be wise to continue making on-time payments in the agreed upon monthly amount.
  • You’re building credit history or raising your credit score with your on-time payments.

• Some car loan agreements include prepayment penalties.

How to Pay Off a Car Loan Early

There are a variety of ways you can pay off your car loan early. Here are a few options to help you choose the best option for you:

• Making Bi-Weekly Payments – Confirm with your lender to ensure it’s okay; divide your monthly car payment by two, and make that payment amount every two weeks. This method allows you to make 13 full payments per year rather than 12. 

• Higher Payments Each Month – Round up the amount to the nearest $50 each time you make a payment.

• Make An Additional Lump Sum Payment Each Year – If you don’t want to round up for each monthly payment, you can choose to make one large extra payment per year to achieve the same interest savings.

• DO NOT Skip a Payment – Some lenders allow you to skip one or two car loan payments per year. It’s tempting, but it will just increase your loan term and interest paid.

• Consider Refinancing – After making one or two years’ worth of on-time, in-full payments, you may be able to refinance your loan. Only do this if you are able to get a better interest rate. This will lower your monthly payment, and make it easier to pay more than what’s required each month so you can pay off your loan early.

Find Out More With Bell Road Mitsubishi Today

Now that you know the situation when it comes to paying off a car loan early, you can make the best decision for your needs around Mesa. Contact our team today, and we’ll get you back on the road in no time with any of the new or used vehicles in our inventory.