Financing a car, but what if I finish paying it off early?

Question

I am thinking about financing a 2004 Maxima because I don't have all the money right now. The car costs about $11,500, I have a $5,000 down payment. I want to finance it for 3 years, I could do 2 but the payments are smaller with 3 and I would rather be safe than sorry because I know I can make the 3 year payments eaisly. But what if I can pay it off faster like in 2 years, will I still have to pay the finance fees for the 3 years? If anyone has any other ideas feel free to share them. Thanks!

Answer 1

Yep! You will still have to pay the interest you would have incured in that third year. This is why they are giving you the car and you are only giving them $5,000! They need to make their money. They don't gain anything if you end up paying them off early. I would just stick to the three years. The money you would have used to pay it off in two years you should save. That way in three years you own the car and have a bit of savings to buy yourself something special :)

Answer 2

Save up for a bit longer and buy a Buick LeSabre instead.

Answer 3

No you can always pay more than the minimum amount due resulting in less interest because you are paying it off faster.  Usually with cars you dont have any type of fees for paying it off early like you do houses.

Answer 4

unless there is an early payoff penalty you will pay interest only for the time you have the money

Answer 5

Make sure the contract has a clause that states there are no penalties for early payoff.

Answer 6

If you finance the car over three years, but pay the company the full amount in 2 you shouldn't have to pay anymore, as the price has been payed of, so u could take out a three year finance, and if you accumulate enough money in 2 yrs, you can just pay them off straight away, if u wanted to

Answer 7

No. A a matter of fact if you pay it off early, you would save on interest. You could do your own auto calculator, changing and adding additional payments and it would show a chart.

Answer 8

Some contracts state if you have an early payoff then yes you would still pay for the fees but some contacts don't have that agreement. Ask the loan officer at the dealership and they will be more then happy to answer for you.

Answer 9

no if you pay it off early the finance charges aren't accrued.

Answer 10

Check your loan documents.  Most loans these days have no early payoff penalties, meaning that you can pay off the loan early if you want without any additional fees or interest payments.

Talk to the loan officer and tell them exactly what you said here and make sure that the loan to settle on will have no penalties.