Paying off Your Car Loan: What's Next?
You did it! You made the final payment on your car loan! You’re basking in that rush of pride and accomplishment as you stare at the $0 loan balance on your mobile banking app. But that feeling is interrupted by a question, “Do I need to do anything else?” Truth is, there are a few more things you should do after paying off a car loan.
What to Consider After Paying off an Auto Loan
First, let’s review the technical stuff.
- Contact Information. Make sure your contact information is up to date. This will ensure that a letter of satisfaction (lien release) gets delivered to the correct address. This letter is a notarized statement from your lender indicating that they no longer have a security interest in your vehicle. BluCurrent mails letters five business days after the loan balance is satisfied.
- Title and Lien Release. Keep the lien release and title in a secure location. These two documents must be presented together when a change of ownership takes place. However, the best practice is to get a clean title issued from the DMV.
- Clean Title. A clean, aka free and clear, title does not show a lien holder. Secure a clean title at the DMV. The DMV will collect the title and lien release and send you a clean title. Possessing a clean title makes selling or trading in your vehicle easier.
- Vehicle Insurance. Notify your car insurance carrier. You may need to present a copy of the lien release. This is important in case of a claim. Most insurers issue checks for insurance claims that require the lender’s endorsement. You’ll save this step by notifying your insurer.
- GAP Coverage. If you paid your loan off early (cash, sale, or trade-in) and you had GAP coverage on the loan, you may be entitled to a prorated refund. Review your GAP policy for details.
- Vehicle Service Contract (VSC). VSC’s stay with the vehicle. Also, most VSC’s are transferable for a fee. If you sell your car, the buyer may be able to transfer the coverage. If you trade in your vehicle, you may be eligible for a prorated refund. Contact your VSC provider for details.
Now that we’ve covered the technical stuff, let’s look at the fun stuff!
You’re used to making a car payment. Instead of shifting that money to another place in your budget, why not start a “car replacement” fund? BluCurrent in Springfield, MO offers My Choice Savings Accounts for such an occasion. Let’s do the math:
$300 monthly payment X 6 months = $1,800.
Wouldn’t it be nice to have $1,800, or more, towards your next purchase? It could cover items like:
- Down payment
- Licensing fees and sales tax
- Annual vehicle insurance premium (insurance is always cheaper if you pay in advance)
Did you know that a down payment increases the likelihood of getting a car loan? Lenders like to know that borrowers have “skin-in-the-game”. It could also mean a shorter loan term, or an upgrade to a newer vehicle with fewer miles on the odometer. The best money is your money. The less you need to borrow the more financially secure you’ll be.
Whether you decide to store your newly found “savings” (aka your old payment) in a savings account or are ready to purchase your next set of wheels, we’re here to help! Learn more about BluCurrent savings accounts or apply for your next auto loan online.