Can I Pay Off My Vehicle Loan Early?

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Drivers in El Cajon and La Mesa who opt for new or used vehicles with an auto loan will have set monthly payment amounts to ensure that vehicles are paid off in time. However, what if you’d like to exceed your monthly payment amounts? Can you pay off your vehicle loan early? Yes, paying off your vehicle loan early is an excellent option for local drivers! With the following comprehensive guide, our expert finance team at Kearny Mesa Kia covers these topics: 

  • When paying off a vehicle loan is or isn’t viable
  • How to pay off a vehicle loan early

Get help deciding whether you should start working towards an early vehicle loan payoff and learn the necessary tips to get you there. Ready to learn more? Contact us today for more information! 



Is it Best to Pay Off a Vehicle Loan Early?

Paying off a car loan early requires diligence and sound financial planning, but you’ll be rewarded with decreased chances of becoming upside down on your car loan, lower overall interest paid, and a decreased debt-to-income ratio, and you’ll be a step closer to financial freedom! 

When Paying Off a Vehicle Loan Early is Ideal

  • You have little or no additional debts and would like to get your vehicle loan paid off so you can free up your savings for other expenses
  • You have sufficient funds in your budget so that making larger monthly vehicle payments won’t affect your emergency fund and other savings
  • You’re trying to lower your monthly vehicle expenses to plan for a larger financial goal, such as growing your family and retirement
  • You’re hoping to enhance your debt-to-income ratio

When Paying Off a Vehicle Loan Early Isn’t Ideal

  • You don’t have many additional emergency funds set aside
  • You have exceptional interest rates, which makes it wiser to continue making on-time payments as currently agreed-upon. The funds you would’ve used to pay off your vehicle loan early could be better used as an amount set aside for a financial goal or as a retirement fund. 
  • You’re using your timely monthly payments to enhance your credit score or build your credit history
  • Some vehicle loan agreements feature penalties for prepayment. If this is so, you would want to avoid those loan prepayment penalties by maintaining your regularly scheduled loan amount. 

How to Pay Off a Vehicle Loan Early

There are a few ways you can pay off your vehicle loan early. Take a look at the following routes to paying off your loan early: 

  • Bi-Weekly Payments – Check with your loan lender to make sure this technique is approved; divide your monthly payment in half, then make that payment biweekly. This should allow you to make 13 yearly payments rather than 12. 
  • Round Up Monthly Payments – For each monthly payment, round up each payment amount to the nearest $50. 
  • Make One Extra Yearly Payment in One Lump Sum – Prefer not to round up each monthly payment using the method mentioned above? You can choose instead to make one extra large payment yearly to get the same interest savings. 
  • Avoid Skipping a Payment – Some lenders allow you to skip one or two vehicle loan payments yearly. This could be tempting if you’re in the middle of a rough financial period, but it will only tack on more loan interest and lengthen your loan term. 
  • Refinance with a New Vehicle Loan – Once you’ve made one or two on-time, in-full yearly payments, you may be eligible for refinancing. You’ll only want to refinance when it gains you a reduced interest rate, however. Your monthly payment will reduce with lower interest rates, making it simpler to pay more than the required monthly amount so that you can pay your car loan off early. 

Discover More with Kearny Mesa Kia Today!

Can you pay your car loan off early? Absolutely! Our expert finance team is here with the ease of online financing and new vehicle specials when it’s time to purchase your next new vehicle! Contact us to learn more today! 


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