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Should you pay your car loan off early?

Tara Baukus MelloQuestionDear Driving for Dollars,
I have a car loan with a high interest rate due to not-so-good credit. I'm doing OK financially now. Should I pay it off early to save money?
-- Trish

AnswerDear Trish,
If you can put extra money toward the principal on your car loan every month while still maintaining your other financial obligations, this is probably a good idea since you say your interest rate is higher than average. However, keep in mind that you'll need to add a sizable amount -- generally at least $100 -- to your monthly payment to make a significant impact. To see how much you will save, use Bankrate's car loan early payoff calculator.

Ask the adviser

If you have a car question, email it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

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