Having a car that was purchased on credit, of course you are used to paying regular installments every month. Over the next few years, you will have an obligation to always make Car Installment Payments on time, according to the agreement that has been made with the finance company. But if it turns out that in the middle of the road you have sufficient funds, then it never hurts to pay off the car installments early. This kind of action is quite common, especially for those who already have enough funds to make early repayments.
Early repayment like this must be done in the right way because there are things related to this credit agreement that you must fulfill properly with the financing company. This is important, to prevent misunderstandings and losses in the future. Check out some of the tips below, which you can do if you want to pay off a car loan early:
Prepare the penalty fee for Car Installment Repayment
In the car purchase agreement on credit, you have an obligation to pay off the car installments according to the tenor that has been selected. However, if you want to pay off early, this will also be possible, of course with a number of conditions. You will have an obligation to pay a penalty fee for this early settlement.
The amount of penalty you have to pay will depend on the policy of the finance company used. It is important to understand this from the start because this penalty amount could be quite large. You have to prepare this penalty fee from the start so that the car payment process can be carried out smoothly and without problems.
Pay Off Before 1 Year Of Credit
You can pay off your car installments at any time if you already have sufficient funds for this matter. But in practice, each finance company will have rules related to this. Some finance companies may allow to pay off before 1 year of credit, but some other companies may not allow this.
Make sure you understand this well, you can ask the financing company for this information first. In addition to the timing of repayment, it is also necessary to calculate the amount of the penalty fee that must be paid. In general, the sooner you make a payment, the greater the penalty fee that must be paid.
Pay Off After 1 Year Of Credit
Still related to the repayment period, you can pay off this installment after the installment period runs for more than 1 year. Usually, almost all finance companies allow repayment after 1 year of installments like this. But even so, it is important for you to ask the financing company that you are using first.
You also need to ask about the amount of penalty that must be paid later. On average, the finance company will apply a penalty of about 5% of the total remaining debt that is still owned, if you have made installments of more than 1 year like this. Ask this first, so you can prepare the right amount of funds.
Understand and prepare the administrative fees for settlement
In addition to the penalty fee in paying off the car installment, you also have an obligation to pay a number of administrative fees. The amount of this administrative fee will vary, depending on the policy of the finance company used.
Ask for this cost information first, you can contact the finance company by telephone or other. This will make your business easier so that the car payment process can run more easily later.
Go To A Finance Company And Pay Off
If the funds are ready, you just have to go to the company. Complete all the required documents and visit the finance company used. Pay off your car installments directly there. Follow all these repayment procedures carefully, so that this matter can be completed more quickly.