What Is a Car Loan Settlement Figure & How Is It Calculated?
What Is a Car Loan Settlement Figure & How Is It Calculated?
Posted on January 25, 2023
Once again, a customer has a question for us, and this time, it's one that borrowers who have been making loan payments for a long frequently ask. What is a car loan settlement figure and how do you obtain one?
Our auto loans team outlines the definition, calculation, and methods for obtaining an accurate amount of a vehicle loan settlement figure.
Early Car Loan Settlement
The cost of paying off a car loan in full up front is the settlement amount.
The amount you still owe on the borrowed money will be included in that sum. Given that interest is front-loaded, there might be a modest interest rebate as well, but we wouldn't bank on it.
A settlement amount is required in order to pay off an auto loan early. This is the total sum that you will pay the lender to repay the loan.
How to Calculate a Car Loan Settlement Figure
It’s difficult to calculate the exact amount as each lender front loads interest in different ways. Plus, different loan lengths, interest rates and overpayment rates can all change the amounts.
You can perform a basic calculation though.
Multiply the amount due each month by the number of vehicle loan installments you still owe. The interest rate is then subtracted.
Although it will only be a rough estimation and will not account for any interest rebates, it should give you a general notion.
Using a vehicle loan settlement calculator, you may also get a decent idea of how much you might be facing.
You can also receive a car loan settlement figure by getting in touch with your lender. They will be able to provide you with the precise amount to the cent.
That figure will be good until your next loan payment or 28 days, whichever comes first.
If you pay that figure before your next payment, your loan will be settled in full.
Should You Pay Off Your Car Loan Early?
Although how you manage your money is entirely up to you, there are a few things to think about before repaying the loan.
Verify that your loan has no early settlement penalties. The majority of the auto loans we offer don't involve early settlement costs, but we are aware of many that do.
Check your loan documentation or inquire about receiving the settlement amount from the representative. The cost will typically be a certain number of interest-charged months, but it may change.
If you're only going to have to pay a charge for the privilege of paying off your loan early, there's no use in doing it!
Your credit score is improved by car payments. You forfeit that benefit by paying off your debt early.
This is an important factor to take into account if you're trying to rebuild your credit. Consider the advantages of not having the monthly expense as well as the drawback of not having that payment history entry.
On the surface, paying off a debt early could seem like a smart idea, but be sure to read the fine print first!
For those of you who know that you have a challenging credit situation, please visit Unique Chrysler where we have a team of credit specialists ready to help you get approved for a car loan today!