Installment loan. This is probably a dumb question, but 1year ago, I took out a 5 year loan for a vehicle.?

Question

I am now in a position where I can pay off the loan in full. If I do this, will I still be paying interest for the entire loan?

Answer 1

That is SO not a dumb question!!!!!!

I was in a similar situation when I had my Chase car loan. I asked them the same question and got the run around and a lot of legal-ese.

I asked my bank, who had no vested interest in this, and they told me the truth.

When you pay the loan off early and in full, you avoid the interest over the entire loan.

Chase was so shady that I was not able to pay the entire amount online ("web problems"), I had to send them a check!

Answer 2

It depends on the type of loan you took out. Some are called simple interest loans, and you pay interest only on the unpaid balance. Others are set up so that you have to pay the full balance and the full amount of interest for the set life of the loan, even if you prepay it. Check the paperwork, and look for anything about prepayment penalties. Call the lendor and ask there, also.

Answer 3

Nope.

I just did the same thing with a cash loan. Paid off a 4 year loan in just over 1 year. unless your loan contract has a specific clause that states you have to pay a certain fee for closing early ( which you would almost never have) you will not have to pay any additional interest. Your payoff amount will be calcuated with interest just up to the exact day you pay the loan off...

Answer 4

You pay it, but you get it refunded. Unless you go to the bank and get a payoff figure for the loan. You still might get some sort of a refund on the interest. The payments are calculated out so you're paying the interest on the complete life of the loan, if you pay it back sooner, you're paying less interest.

Answer 5

Is there a pre-payment penalty? If no, go ahead and pay it off.

Answer 6

no call your finance company and ask for a payoff amount it's your balance minus interest