I hate debt, really. I can’t stand owing people money, and vehicles are one of the biggest expenses in my pantheon of monthly bills. Of course, my mortgage wins the first place trophy, but that couple of hundred dollars a month for a car payment could really help with other things. Though it’s rare that I’ve been able to buy a new car outright, it’s always been part of my strategy to try to get any car I’ve bought paid off as quickly as possible. Paying off your car loan can be one of the most fiscally sound decisions you make! There are a number of benefits to this, including these four:
It Saves Money In the Long Run
Even if you got a fantastic rate on your car loan, you’re still paying interest. Over a couple of years, this can add up quite a bit. Sometimes into thousands of extra dollars! The earlier the loan is paid off, the less interest you pay.
You’ll Improve Your Credit Score
Paying your car off early has the added benefit of potentially raising your credit score. This is because you’ve shown creditors that you’ve taken out a loan and been responsible enough to pay it back in its entirety. Well done, you! (And if you’re seeking a car loan for bad credit but can’t find the help you need, visit the folks at Thornton Road CDJR!)
Free Up Your Cash Flow
Though it may initially take a big chunk of change to pay off a sizeable loan, your car payment is history once you make that move! You’ve now freed up that $200 to $400 monthly payment to be used for other things. I try to put it into savings, but that rarely works! It usually goes to home improvements or clothes for the boys for the school year. But it still goes somewhere that’s way more useful than paying off a loan!
Save On Insurance
Unless you pay really close attention to your insurance deductibles, this is a little-known fact: A car with a lien on it is required to carry a certain level of comprehensive and collision insurance. This is generally higher than what you would choose on your own. Once your car becomes your own, you can change everything: Deductible, glass coverage and even liability coverage.
The biggest advantage to paying off a car loan is the financial freedom you get from having one less bill on your plate every month! The good folks at Thornton Road CDJR know this, and they have Chrysler, Dodge Jeep and Ram truck lease incentives every month that can make this goal easier if you’re looking for a new vehicle. Stop in today!