There are many reasons you might need an auto loan early payoff calculator to figure out the loan payoff amount for your current vehicle loan. Maybe you’re ready to replace your current vehicle, and need to know whether it’s better to trade it in or try to sell your vehicle before you get another. Or perhaps you’ve received a lump sum — a large tax refund or a bonus or inheritance — and want to know how much interest you can save by paying off your loan earlier.
Another good reason to use an auto loan early payoff calculator is to find out how much you can save by paying an additional amount on your loan each month. Even just an extra $40 or $50 each month can end up saving you lots of money down the road, and a payoff calculator can often help you figure out exactly how much.
There are a few things you need to do when making an early payoff calculation. You have to know your original loan term, and the number of months remaining in your loan. You also have to know the original loan amount and the interest rate of your loan. Put all of this information into the calculator and you’ll be able to find out the dollar amount required to pay off your loan today. Some calculators also allow you to find out how much you can save if you pay more than your standard monthly payment.
One word of caution: sometimes lenders specify penalties for early payoff. It makes sense for the lender, when you think about it. The lender underwrites the loan with the expectation that the consumer will pay a certain amount of interest to compensate them for the risk. If the lender receives substantially less in interest income from the loan, then the loan is worth less to them. On the other hand, many lenders are happy to be repaid earlier than expected, because they can turn around and lend that money to another consumer, and continue to grow their company and lending portfolio. It is something to be aware of — it’s always a good idea to talk to your lender (or review your loan documents) before you consider actually going ahead with an early payoff.
Figuring out your payoff amount, or the savings you can get from making larger payments on your loan, isn’t a difficult thing to do. But it does require you to know a little bit about how auto loans work, as well as the specifics of your own loan. Whatever your motivation for using an auto loan early payoff calculator, be sure to work with your lender to find out the implications of paying off your loan early.Written by: