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What is car loan curtailment?
I was looking at my car loan contract and I saw the phrase “curtailment.” What does this mean for my car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Although the term is used far more often for mortgages than for
car loans
, curtailment refers to paying off all or part of a loan ahead of schedule. This means that you pay more toward the principal of your loan each month, or maybe you pay the entire loan off in one go.If you don’t have a curtailment option, be sure to check with your lender before you begin making early or extra payments. Some lenders charge
prepayment penalties
, which are a 2% to 4% surcharge for making payments early. As you budget out your car loan, make sure you’re not overpaying for your car insurance. Use
Jerry
to compare dozens of competitive quotes (this is totally free!) and switch policies in-app. View full answer
- Gregory R.
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