Should You Payoff Your Car Loan?

Paying off your car loan early might be a good idea in some cases. If you have money in a general savings account that is only earning 1% or less, and your car loan has a higher interest rate, it makes sense to use some of that money to pay down your loan and thereby reduce the amount of interest you are paying.

Some other things to consider before doing this would be: Are you going to be needing that cash for anything else in the near future? Do you have other loans with higher interest rates that you might want to put that money toward? Does your lending institution have a penalty for paying your loan off early?

One final thought: If you are trying to build up your credit score, it is wise to make payments on your loan for at least a year before paying if off in order to build up a credit history.