If I pay off my ten-year auto loan early do I still have to pay the interest on the principal?
In general terms, no. If your loan is written with simple interest, the interest is based on the balance of principal outstanding. When you pay off the balance early, the loan stops earning interest. It's unlikely that your loan contract will include a prepayment penalty, but ask about any such penalty if you call the lender to find out the payoff amount, just so there are no surprises.
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In general terms, no. If your loan is written with simple interest, the interest is based on the balance of principal outstanding. When you pay off the balance early, the loan stops earning interest. It's unlikely that your loan contract will include a prepayment penalty, but ask about any such penalty if you call the lender to find out the payoff amount, just so there are no surprises.
