I financed my 03 mini cooper 7 months ago. I am now able to pay off the loan completly. They say I have to pay $500 if I pay it off within the first year. After the first year its free to do so. If I pay it off now, will it affect my credit rating badly? And how does it work exactly? Do I still have to pay all the interest charges as if I had kept financing it for the whole term? Is it smarter to pay it off now, or wait 5 more months so its free to do so?
I know these are a lot of questions, of course the dealership is not too helpfull in this area. I appreciate and advise.
thanks
I can help with this. I worked at Chrysler Dealerships for 8 years, so trust what I am about to tell you. First of all if you can avoid the temptation to spend the money you have to pay the vehicle off it will help your credit score more if you continue to make a few more payments and then pay it off when there is no prepayment penalty. When you are ready to pay off the vehicle you need to call the financial institution you used and ask for a 10 day payoff. This WILL NOT include all of the finance charges that would be accrued if you payed for the whole term. You will pay some, but that's just the way it is. So take your time and pay it off ,get a few more payments under your belt. It will raise your score and then when you pay it off, don't forget to adjust your insurance so that you aren't paying quite as much for a financed car as well. FYI - I live in Colorado I don't know where you are, but we don't have any loans with prepayment penalties anymore. It might be different there. Check it out to make sure you aren't getting the runaround regarding this, but stick to the plan I gave you and you will come out ahead. Good Luck
In the United States auto loans vary as do the terms for early pay-off's of the loan so you would have to read your original contract to determine if there is a penalty for paying it off early. I have only paid one car off early and there was no penalties assessed nor did I have to pay off the interest which had not yet accrued.
Typically your payments would be based on the amount financed and the interest accrued over the length of the contract terms. So paying it off early should eliminate much of the interest that was calculated into the original payment terms.
It will not adversely effect your credit to pay it off early.
335 views
Usually answered in minutes!
Should I call my bank to find out for sure if it will in fact affect my credit score? Or who does a person normally call for that sort of information?
I worked out all the numbers if I were to pay it off early, and it would work out being only $200 dollars to cancel early because I would be saving the other $300 by not paying interest....I think....
I financed a car through the Coastal Federal credit Union. but never received any statement, and or payment booklet
×