Title: 'Should I Pay Off My Car Loan Early?' Here's How to Decide | Student Loan Hero
Headings: 3 Reasons You Should Pay Off Your Car Loan Early (And 2 Times You Shouldn’t)
3 Reasons You Should Pay Off Your Car Loan Early (And 2 Times You Shouldn’t)
Ben Luthi
Pros of paying off a car loan early
1. Save money on interest
2. Lower your debt load
3. More monthly cash flow
Cons of paying off a car loan early
1. Less cash flow and savings
2. You could earn more by investing
Consider auto refinancing
Should I pay off my car loan early?
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Content: So if you have the cash to pay off the car loan early, doing so could make it easier to get approved the next time you apply for credit. 3. More monthly cash flow
Once your car loan is paid off, you’ll no longer have to make that monthly payment. This frees up cash for other goals, such as paying off other debt and saving for retirement. Cons of paying off a car loan early
To some, the benefits of paying off a car loan early make the decision a no-brainer. But if your interest rate is particularly low, take a step back and consider a few things you’re giving up by making bigger payments on your loan. 1. Less cash flow and savings
If you’re adding more money to your car loan every month, that’s less money you have for other financial goals and obligations. For example, if you have debt at a higher interest rate (such as a high-interest credit card), you’d be better off paying that down more quickly. Also, make sure you’re working toward a fully-funded emergency fund – about three to six months’ worth of expenses.