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Can you pay on the principal of a car loan?
I want to pay my car loan off early. However, I’m not sure exactly how to do it. I’ve read that you can double up on monthly payments, but I think paying toward the principal is the better move. Can I pay on the principal of my car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Paying off your
car loan
early is always a financially savvy move! The good news is that you can usually pay on the principal of a car loan, provided that your lender doesn’t have any [prepayment penalties]](https://getjerry.com/car-insurance/prepayment-penalty-car-loan
).A prepayment penalty is a fee levied by some lenders to maximize their income off interest. If you were to pay off the loan early, they don’t get their maximum revenue. As a result, the prepayment penalty deters you from paying toward the principal. Confirm with your lender whether they have prepayment penalties before you proceed.
If your lender doesn’t have any prepayment penalty, you’re free to pay toward the principal of the loan as long as you want and in whatever installments fit your budget and cash flow.
If you want to find more money to pay toward the principal of your car loan, reviewing your car insurance policy is ideal. To compare quotes with ease, use the Jerry app.
As a licensed broker,
Jerry
helps you find and compare quotes from over 50 top providers in minutes. When you find a better rate, Jerry can help you buy your new coverage and even cancel your old policy!View full answer
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