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Auto Loan Prepayment

Auto loan early prepayment can save a car buyer a lot of money and make life much easier. Every car buyer should remember that lenders will always take payments that exceed the required pay off amount.

There are several excellent methods of auto loan prepayment available to car buyers. The best is to pay off the full amount of the auto loan if the money becomes available. If a car buyer thinks they have the money for complete auto loan prepayment they should contact the lender. Some lenders may let the borrower pay off a lower amount of money in exchange for auto loan prepayment.

Another good method of auto loan prepayment is to simply pay more than the required payment on your auto loan each month. Adding just $25-50 to your monthly payment can enable you to pay off a car loan several months early and save money.

Reasons for Auto Loan Prepayment 

There are several excellent reasons why a person should attempt auto loan prepayment. The first reason is obvious: eliminating your car payment will increase your monthly spending power by several hundred dollars a month.

Another excellent reason for auto loan prepayment is that you do not have title or clear ownership to a car until the auto loan is paid off. You will not be able to sell the car until is actually paid off and may have trouble trading it in.

Buyers should also remember that as long as the auto loan is not paid off the car can be repossessed. The lender still owns the car until is paid off and can repossess it at any time. Even if the car is repossessed the borrower will still have to pay the car loan off unless they declare bankruptcy.

Having an unpaid car loan or a repossession on your record can wreck your credit score. This can make it hard or impossible to borrow money, take out a mortgage or get another car loan. It can even affect your ability to get a job or rent an apartment.

Tips for Auto Loan Prepayment

If you have a car loan you should monitor the loan and the amount you owe. Know how much you owe and how long you have to pay it off. You can learn this by reading your auto loan agreement or visiting your lender’s website.

It is a very good idea to visit your lender’s website on a regular basis to see how much you owe. This way you can see if you can attempt auto loan prepayment. If you have the money and you only have a few payments or a small amount left on your auto loan it makes sense to attempt auto loan prepayment.

Auto Loan Prepayment and Your Credit Score

One thing that everyone should remember is that auto loan prepayment can improve your credit score. It will make you look responsible and show lenders that you will pay off your loans.

Improving your credit score an increase the amount of credit you have which can increase the amount of money you can borrow. Everybody who has an auto loan should consider auto loan prepayment in order to improve their credit score.