Paying off your car loan early: is it possible?

Found out some exciting news and need to buy a bigger car to fit in the new addition? Manufacturer released a new model you’ve been salivating over and simply must get your hands on? Perhaps you’re looking to reduce the total amount of interest over the length of the loan?

Or maybe, just maybe, you’re thinking about selling all your worldly possessions to buy a boat and sail the seven seas looking for buried treasure and saying ‘arrr’ a lot (pssst - we can help with boat finance if that's the case).

For whatever reason, you’re considering paying off your car loan before the end of the loan term that was originally agreed upon with your lender. And because of this, you might be wondering if it’s even possible and have a few other questions about it all, which hopefully we’ll answer in this article.

So, is it possible to pay off my car loan early?

Yes. But...

You might be charged for the privilege. There are so many lenders out there, each of whom offer a range of different car finance packages with unique terms and conditions, so it’s impossible to specify each and every one’s particular ins and outs here. As such, you’ll need to locate the paperwork you signed when applying for the car loan. Once you have that, you then will have to comb through the whole thing to find where it details whether or not it’s possible to pay it out without penalty fees.

You may find that if yours is a variable rate loan, it’ll be less likely to charge fees for paying it off prior to the end of the loan term. However, if it’s a fixed rate loan there’s a higher chance you’ll have to pay fees  if you want to break free before the loan term finishes because banks will be looking to recoup some of the prospective revenue losses caused by your premature departure.

Of course, you can alternatively give us a call on 1300 787 288 - we’ll be able to get to the bottom of whether or not you’ll be penalised financially before you can say ‘These guys are bloody awesome’.

Types of early repayments

If you’re thinking about paying off your car loan early, this can be done in a couple of ways:

Additional/extra repayments over time: In this circumstance, you’d look to pay more than your usual payment amount in order to pay the entirety of the loan off faster, which would in turn reduce the amount of interest you’d pay over the life of the loan.

Lump sum payment: As the name suggests, instead of sticking to the agreed-upon loan term you’d make one payment that paid off all of the money owing at once.

Reasons to pay off your car loan early

There are some great reasons why paying your car loan off early can be beneficial to you, including:

• You’ll save on interest repayments

If you have the capacity to pay off your car loan early, whether through additional repayments or a lump sum payment, it will reduce how much money you’d otherwise be spending on the interest the lender is charging you.

• Better financial freedom

When there’s one less ongoing repayment you need to make, you’ll have more money coming in to save or spend on whatever you want.

• Peace of mind

Getting rid of one of your debts can provide you with better peace of mind.

Chat with us today to get the best new car finance deal

Considering paying off your existing car loan so you can sell it and upgrade to something bigger and better? We’re here to help.

When you choose Stratton Finance, you can rest assured you’ll end up with the best car finance deal to suit your needs perfectly. With more than 20 years’ experience in this industry, we know exactly how to find nothing but the most ideal finance package from the right lender.

Over the two-plus decades we’ve been operating, we’ve grown our pool of available lenders exponentially, too, which means when you engage us to help you with your finance needs, we have a huge number of finance options at our fingertips. Find out how outlandishly low your monthly repayments could be on a brand new car using our online car finance quote tool and/or give us a call on 1300 787 288 if you’re interested in securing the lowest car finance interest rate possible.

Also, our industry partners carconnect will work with you to not only help you find your dream car at a sensational price (and have it delivered right to your door), but can also help you sell your car and achieve a solid price in the process. Perhaps best of all, they’ll pretty much take care of everything so you can focus on the more important things in life. Give them a call now on 1300 880 008 to learn what they can do for you.