Car Loan Early Payoff Calculator: Save on Interest and Pay Smarter
Use our car loan early payoff calculator to see how much you can save on interest. Learn smarter strategies to pay off your auto loan faster.
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When you ask Americans about their personal finance goals, many mention paying down debt. It's no surprise why: Reducing or eliminating debt can help you save money, reduce stress, and boost your credit. But where do you start? Your car loan is often the ideal debt balance to target first.
Behind mortgages, auto loans are the second-largest debt category in the United States. Americans collectively owe $1.64 trillion in auto loans, around 9% of all U.S. consumer debt.
Benefits of Paying Off a Car Loan Early
Though it may seem like yet another hurdle in your way, paying your auto loan off early is an overwhelmingly positive move for several reasons.
Financial Savings
When you take out a loan, you have to pay the lender back the original amount — the principal — plus interest. Those interest payments are spread out over the length of your loan. The sooner you repay your loan, the less you pay in total interest.
Use a financial calculator like a car loan calculator for early payoff to see exactly how much you'd save with accelerated payment.
Improved Credit Score
Paying off any of your debt balances, including your auto loan balance, reduces the total amount you owe. Since "amounts owed" is a major component of your credit score, bringing down your total loan balance by paying off your auto loan early will help boost your score.
Enhanced Financial Freedom
When you don't have to worry about making your car loan payments every month anymore, you can put that amount to other financial goals. You'll have more freedom to save, spend, or invest in a way that works for you.
Car Loan Early Payoff Calculator
Car Loan Early Payoff Calculator Key Inputs Explained
Understanding what each input means in the car loan early payoff calculator is essential. That way, you'll enter the correct numbers about your loan and get an accurate result.
Loan Term
The loan term is the original time scheduled for you to completely pay off the loan via regular payments. With car loans, the term is typically between 24 and 84 months.
Remaining Months
The remaining months input measures how many months remain in your loan term. For example, if you took out a 36-month loan 12 months ago, you have 24 remaining months on your loan.
Auto Loan Amount
The auto loan amount, also known as the loan principal, is the amount you borrowed. If you put $5,000 down on a $30,000 car and borrowed the remaining $25,000, your original auto loan amount is $25,000.
Additional Monthly Payments
The additional monthly payment is how much extra you plan to put toward your car loan every month to pay it off early. This could be $50, $100, or any other dollar figure that works for your budget and financial goals.
Current Payments
Your current payment is how much you must pay toward your car loan every month. The average monthly payment for a new car in 2024 was $734, but your payment may be higher or lower depending on factors like your credit history, loan term, and the loan amount.
Understanding Fees and Penalties
When managing your loans, including paying them off early, you need to understand the fees and penalties you may incur. Familiarizing yourself with the fees included in your loan contract will help you take steps to minimize the amount you have to pay and avoid any unpleasant surprises. These fees may include:
- Prepayment Penalties: Your lender may charge you fees for paying your loan off early or making additional payments. Check your loan contract to see if you are subject to any prepayment penalties and, if applicable, how much they are.
- Late Fees: You will likely also face fees if you don't make your monthly car loan payment on time or within the grace period.
- Other Associated Costs: Don't forget about other costs related to your car and auto loan, like title and registration fees, extended warranty fees, and default fees if you default on your loan.
Whether you decide to pay off your car loan early or not, the most important thing is understanding all your financial options. Visit MoneyAtlas for side-by-side comparisons of products like loans, credit cards, and bank accounts to help you make informed decisions. Contact us today to get the best auto loan for your situation.