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Why would a car loan payoff be higher than the balance?
I want to pay off my car loan, so I requested a car loan payoff statement. However, the payoff amount is more than my balance. What’s going on?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
This may come as a shock, but a payoff letter will always be higher than the balance of your
car loan
(or any other loan). Here’s why.A payoff letter always includes added interest from the day you requested it. Essentially, the lender is asking for the balance plus interest—which is exactly what you owe them.
If you’re able to pay off the amount indicated on the letter, congratulations! You’re all done with your car loan. Make sure to keep the letter as proof that you own the car in its entirety.
When you’re finished paying off your loan, you may want to switch your car insurance to reflect the level of coverage you (not your lender) want.
Jerry
can help you compare competitive quotes to find an affordable policy with the protection you need.View full answer
- Gregory R.
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