paying off my truck and avoiding penalty?

Question

im about 2 grand away from paying off my truck. i called today and the bank said i would have a 100 dollar penalty for paying it off early. well, i was thinkin about paying 1900 bucks and just leaving the rest til my final payments due in about 3 years. my question is, would i be better off paying the whole thing off and just accepting the penalty, paying most of my loan like mentioned above and waiting, or paying maybe half of it and invest the other half in an ira, or if you have an idea, let me know lol. is there any way i can get around the penalty? THANK YOU
adam

im payed clear up to august 08'. the loan is through huntington national bank. ill probably just go in there and ask a few questions. It just agitates me that i get a 100 dollar penalty for actually paying for something where alot of people defualt on ther loans. oh, this is in ohio by the way. thank you for the information everyone!!

Answer 1

I think you should just pay it off in full. I don't know what that stupid $100 penalty is, but I'd go in the bank to pay it and ask to speak to a loan officer. Say you are there to pay off your truck and you are so turned off at the $100 nuisance fee that you will never borrow money from that lender again. I am betting you have a very good chance of getting that fee waived because the bank knows it isn't worth alienating a customer who might take out a bigger loan in the future (like a mortgage) for a lousy 100 dollars.

It is probaby a nuisance fee because you are depriving the bank of the extra interest it would earn if you just made your normal monthly payments on the truck. I would check your loan contract, though. I paid off my car early and there was no prepayment penalty. I think you really need to ask them what exactly that $100 is for--make them explain it.

Answer 2

Check your loan documents & make sure there is a prepayment penalty clause. I never heard of that with an auto loan.

At this point, you should be paying more to the principal of your loan than to interest with every payment that you make. Ask your Bank to provide you with an ammortization schedule. That will show you the breakdown of the remaining payments (how much goes to principal & how much goes to interest-each month the interest should go down a little & the principal should go up). Add up the amount of interest you will be paying for the next 3 years. If it is more than $100 - pay it off. You'll still be saving yourself money.

Answer 3

You should just pay it off, because in the long run the interest, if any, will be much more expensive than $100.00. 3 years in interest, what ever the percentage is, will be MORE expensive.

You might want to try getting past the Representative you are talking to, to his/her manager and ask them if the penalty can be avoided in any way (besides not paying it in full until the 3 years).

You might also want to see if paying the interest is less than the penalty, I doubt it though.

In the long run, it will be better to ride the truck knowing that its all yours and not on a loan anymore, if you have the money.

Answer 4

That will destroy your credit. The financial institutions look to see that you can handle making monthly payments. They don't care that you have the money to pay it off in full, they want to see a stable history of paying your bill. I had good credit then about 2 years ago I paid the $4000 remaining on my car with my tax refund and it is REALLY hard to get a loan now. You may have to pay a fee for early termination, but the real cost is the credit score damage.

Answer 5

Huntington National Bank Auto Loan

Answer 6

Don't know what state you're in, but "early payment penalties" are rare these days. Pay it off early and eat the penalty. Next time, read the fine print and watch out for early payment penalties and "balloon payments." Remember, banks don't have big fancy buildings and a lot of cash because they're nice people - they make money off people - watch out for them.

Answer 7

$100 for a penalty doesn't seem to bad. If you can afford to pay off your truck 3 years early, I would do it. You'll feel a lot better not having a truck payment to make every month, and you'll still be able to invest your money if you wish.

Answer 8

Huntington Bank Payoff

Answer 9

Unless there is a prepayment penalty, yes. It's to your benefit. Read the finance paperwork.

Answer 10

if you save over 100 in interest just pay it off , if not pay the1900 and let it ride.