Paying a car loan fully ahead your contract? is it advisable?

**ajkotse** · June 9th, 2014 07:43 AM

Hi tsikoters!

This is like a no brainer question but I need advise especially from the financial experts.

I loan a car for 3yrs (36months), and right now I'm on my 19month. Thankfully I saved enough money to pay it fully, so more than a year and a half instead of 3years I can pay it now fully.

So my question is, is it worth it? What are the pros n cons if I will finish my contract ahead of time. Will they give me a rebate? Is it worth paying all my savings right now or just invest my money somewhere else because I'm already at ease that I can pay my loan anytime?

**Yatta** · June 9th, 2014 08:21 AM

I could be wrong but AFAIK there is no option to recompute a car loan (nor offer a rebate) if you pay the loan ahead, unlike for example a loan on a house and lot. Once its set, its set for the duration. At least thats what I read. I'm on the same boat as you though, with a bit of scrounging I could pay my loan in 3 years instead of 5, pero yun nga 5 years ang contract.

**xninjax** · June 9th, 2014 08:49 AM

For me, I'll fully pay the loan if the investment where I'll put the money will not earn more than the loan interest rate

Pros:
- save on interest rates
- mas ok pa rin walang utang

Cons:
- loan pre-termination fees? (minimal though I think. ask your bank)
- The money can be used for investment

**Syuryuken** · June 9th, 2014 09:25 AM

sa RCBC pwedeng i-recompute basta minimum of 1 year na yung nabayaran mo.

**madduck** · June 9th, 2014 09:42 AM

1. Check your contract. Usually there should be a clause about early termination including the fees and penalties that you need to pay. At least that's what I have from a home loan.

2. You should consider the interest rate from the loan and the interest rate you can get from the possible investment, including the possible fees for early termination.

3. Weigh if you need to be more liquid.

4. I'm not a financial expert.

**admiralpye** · June 9th, 2014 10:07 AM

I recently paid my car loan fully ahead of the 12 month time frame. Ang advise sa akin ng bank, basta lumampas sa first 6-month period, worth it na to pay it off fully dahil negligible naman yung charges. But since I paid it off within 3 month period, mas malaki yung charges sa akin pero worth it pa rin for me personally kaysa ituloy ang monthly payments. :-)

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**admiralpye** · June 9th, 2014 10:08 AM

And yes tama sila dito sa thread, minimal lang ang pre termination fees

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**a9828** · June 9th, 2014 11:56 AM

make sure you can recompute the loan (restructure) so you take out the interest for the supposed upcoming months. usually talaga, kapag car loan fixed na. puwede pumayag si bank na bayaran mo 17mos pero baka naman monthly *17 lang, talo ka nito. make sure you only pay for the remaining loan principal.

**ajkotse** · June 9th, 2014 02:27 PM

Thanks sa mga input! Really appreciate it! Kakabalik ko lang galing sa bank, if I will pay it today I could save 17k (18months remaining) tama kayo andami fee for termination?!?! Medyo weird lang kasi babayaran mo na nga sila ahead of time, tas magbabayad ka pa lalo (that's how business works I guess) hehe.. pero tama kayo minimal naman siya.. I can still save 17k instead of investing my money (without any assurance na kikita toh ng more than 17k within 18months) I guess I'll just pay it nalang.. one thing is for sure.. I'll never loan a car again

halos anlaki nawala sayo pera dahil sa INTEREST instead na bibilin mo ng cash.. be patient nalang mga tsikoters! Hindi naman ako nagsisi, I definitely learned alot from my experience. I'll end this with a quote "GOOD THINGS COMES TO THOSE WHO WAIT" godbless mga tsikoters!