Will USAA Refinance Allow Me To Pay Car Off Early?

Anonymous · ‎07-17-2018

So I'm 10 months into my first auto loan and it has an 18% APR. Turns out it's also an installment loan, which means paying extra or early doesn't save me any money.

USAA has offered to refinance the loan for me, but I'm shopping around. Does anyone know where I can find the loan information, like if it's going to be another installment type loan or if there are any penalties for paying early?

jim44 · ‎07-17-2018

Sounds like you have an Add-On Interest loan.... When shopping, it's ok to ask any would be lenders if there is a prepayment penality. Sounds to me like USAA would charge you a lot less interest than 18%.

Cookiegrabber · ‎07-17-2018

Installment loans don't necessarily charge all the interest when you pay off early. Most non-predatory loans actually allow you to pay specifically into the principal and thus reduce your interest, though I wouldn't know if the sort of thing is common with auto loans. None of the 5? 6? personal loans I've had or my 2 SSLs have forced me to pay interest on principals I've paid off early. Since each loan's terms are different, I'd do like @jim44 said -- confirm.

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Anonymous · ‎07-18-2018

If you truly need to pay interest on the full term of the loan, then refinancing does nothing for you. You actually wouldn't even be able to, because the total owed is going to be so much more than the car is worth.

I have only heard of such types of loans very rarely, but they do exist. And an 18% loan could be the kind of loan from a predatory lender this might apply to. You need to find out for certain if that's the deal or not.

Appleman · ‎07-18-2018

USAA will be a simple interest loan. Meaning if you pay early/extra, your interest charge will be less.

You need to check to language on the original loan and see if it is indeed a pre-payment penalty type loan. You should call the lender and ask for a pay-off quote, that shold let you know. If it is, sorry to hear.

Good luck

Anonymous · ‎07-28-2018

Which state did contract in? Does your truth in lending state simple interest loan?