When Is Early Repayment Worthwhile?
Early repayment of a car loan can be worthwhile if you unexpectedly come into money or if interest rates have dropped significantly since you took out the loan. But be aware: The bank may charge an early repayment fee.
Early Repayment Fee in Germany
- Max. 1% of remaining balance if more than 12 months remaining
- Max. 0.5% of remaining balance if less than 12 months remaining
- Never more than the outstanding interest
Step by Step to Early Repayment
- 1Determine remaining balance: Request the current payoff amount from your bank
- 2Calculate costs: Add the early repayment fee to the remaining balance
- 3Compare: Check if savings exceed the costs
- 4Request car title: Get your vehicle registration back (if held by bank)
Alternative: Refinancing
Instead of paying off the loan completely, you can also consider refinancing. Replace your old loan with a new one with better interest rates.