Can I Pay Off My Car Loan Early?

Hands Doing Calculations with Calculator

Sometimes Mesa drivers ask the finance experts at Rocky's Auto Credit how to pay off a car loan early, and is it even a good idea to pay off a car loan early? Paying off a car loan early is a wise option for some Phoenix drivers. Learn more about paying off a car loan early below, and if you have questions, contact Rocky's Auto Credit. We’re always at your service!

Is it Good to Pay Off a Car Loan Early?

Yes, it’s generally a good idea to pay off a car loan early. It takes a lot of diligence to pay off a car loan early, but it means you’ll save money on interest and decrease the possibility of getting upside-down on your loan. You will also improve your credit rating because your debt-to-income ratio will be lower. Also, the peace of mind of knowing that you completely own your vehicle is always a wonderful feeling!

When Should You Pay Off a Car Loan Early?

Paying off a car loan early on your Glendale ride is a good idea if any of the following apply to you:

  • You want to improve your debt-to-income ratio and raise your credit score.
  • You have little to no other debts to prioritize and would like to get your car loan paid off, so you can free up funds for other usages.
  • You have enough extra money saved up or enough leeway in your budget that making larger monthly car payments won’t jeopardize your emergency funds or other financial obligations.
  • You want to lower your monthly expenses to meet a more significant financial goal, such as entering retirement or growing your family.

When Paying Off a Car Loan Early Isn’t the Best Idea

There are some situations where it isn’t advantageous to pay off a car loan early. Paying off a car loan early might not be the best idea if any of the following points apply to you:

  • You don’t have much extra money set aside for emergencies.
  • If you have excellent credit, it may be wiser to continue making on-time payments of the minimum amount. The reason is that the money you’d use to pay your loan off early could be used for another financial goal, such as investing or saving for retirement.
  • You’re using your on-time, set monthly payments to establish your credit history or improve your credit rating.
  • If your car loan agreements include prepayment penalties, you probably want to avoid those penalties by keeping to your regularly scheduled payment amount.

How to Pay Off a Car Loan Early

If you’re curious about how to pay off a car loan early, below are some helpful tips. Take a look and decide which of these methods makes the most sense for you.

  • Don’t Skip a Payment: Believe it or not, some lenders allow you to occasionally skip one or even two car loan payments per year, especially around the holidays. It might be tempting if you’ve had some unexpected expenses, but it will only lengthen your loan term and cost you more in interest.
  • Make Bi-Weekly Payments: Check with your lender first to make sure it’s okay to use this method; divide your monthly car payment by two, then make that payment amount every two weeks. Using this method, you will actually make 13 total payments per year rather than 12.
  • Round-Up Your Payment Each Month: Every time that you make a monthly payment, round the figure up to the nearest $50.
  • Make One Extra Payment Each Year in One Lump Sum: It’s pretty easy to make one sizeable extra payment per year to achieve the same interest savings. Some people like to do this when they receive their tax refund.
  • Refinance with a New Car Loan: Once you’ve made one or two years’ worth of on-time, in-full payments, you may be the right candidate for refinancing your car loan at a lower interest rate. The lower interest rate will lower your monthly payment and make it easier to pay more than what’s required each month so that you can pay off your car loan early.

Learn More About How to Pay Off a Car Loan Early

Now that you know whether it’s good to pay off a car loan early if you’re able, if you still need to finance a car, contact us to get started. We’re always happy to provide helpful car buying tips and get you into the car of your dreams at an affordable price. You can even apply for financing online! Why not get started today? Our customers love us, and you will too!

Recent News from Rocky's Auto Credit

  • 3 Family-Friendly Activities in the Mesa, AZ Area

    Some rights reserved by ksblack99 Whether you live in the Mesa area or are just visiting, there are several activities around town that the entire family can enjoy. Let’s discuss some of these activities and why they’re so fun.  1. Butterfly Wonderland Butterfly Wonderland is home to over 3,000 beautiful butterflies, making it the largest butterfly conservatory…

  • 3 DIY Car Maintenance Tasks

    Some rights reserved by crazyoctopus Whether you’ve just bought a new car, or you’ve owned your vehicle for some time, it’s important to keep up with maintenance. Keeping your vehicle properly maintained will ensure that it looks good and runs well. If you’re worried about the cost of car maintenance, there are several tasks you can perform…

  • Best Date Spots in Mesa, AZ

    Some rights reserved by Beyond Neon Dating these days doesn’t seem to require any amount of thought or effort, sadly being reduced to swiping left. However, for those of you that are looking to take your date somewhere special, these locations can’t be beaten. Whether on a first date or celebrating your wedding anniversary, let the team…

Saved Vehicles


You don't have any saved vehicles!

Look for this link on your favorites:


Once you've saved some vehicles, you can view them here at any time.

Contact Us


Call Now

470 S. Alma School Rd • Mesa, AZ 85210

Get Directions

Today's Hours:

Open Today! Sales: 9am-7pm

Rocky's Auto Credit 33.4062373, -111.8573523.