How to Determine the Payoff Amount on Your Car
Get clarity on your car loan. Learn to accurately determine the true payoff amount, understanding why it differs from your current balance.
A car loan payoff amount is the exact sum needed to fully close an auto loan at a specific time. This figure often differs from the current balance shown on a typical monthly statement because it accounts for interest that accrues daily, as well as any outstanding fees or credits. Individuals typically need this specific amount when selling their vehicle, refinancing the loan, or making a final payment to become lien-free. Understanding this amount is important for managing financial obligations related to vehicle ownership.
Gathering Necessary Information
Before contacting a lender for a payoff quote, gather key information. Your loan account number, found on monthly statements or welcome letters, identifies your specific loan and streamlines the inquiry process.
The vehicle identification number (VIN) is also important for verifying the specific car associated with the loan. This 17-character code is usually located on the vehicle’s dashboard, driver’s side door jamb, or on loan documents. Providing the last payment date and amount can help the lender accurately calculate the payoff, especially if recent payments have been made. Accessing your lender’s online portal or reviewing past statements can provide these details efficiently.
Methods for Obtaining Your Payoff Quote
Once information is compiled, obtain an official payoff quote from your lender. Many financial institutions offer an online portal where account holders can log in and access a payoff quote feature. This typically involves navigating to the auto loan section and selecting a quote option. Online requests usually provide an immediate quote that can be saved or printed.
Another common approach is to call the lender’s customer service line. Automated systems may provide a payoff quote, or you can speak directly with a representative. When calling, be prepared to state your intention to request a payoff amount and have your account details ready. Some lenders may also offer the option to receive the quote via fax or email.
While less common for immediate needs, a written request can also be submitted to the lender for a payoff statement. This method may involve potential delays as it relies on mail delivery. Regardless of the method, the payoff quote will specify a “good-through date” and provide instructions on how to submit the final payment.
Understanding Your Payoff Quote
Upon receiving a payoff quote, understand its components. The principal balance is the remaining loan amount. Accrued interest is the interest that has accumulated on the loan since your last payment was posted.
Per diem interest is the daily interest charge on the loan. This amount is calculated by dividing the annual interest rate by 365 and then multiplying it by the outstanding principal balance. This daily accrual explains why the payoff amount changes over time and why a specific “good-through date” is provided on the quote.
The quote may also include any outstanding fees, such as late payment charges, or unapplied credits that adjust the total amount due. If the final payment is not received by the “good-through date,” additional per diem interest will accrue, necessitating a new payoff quote. Some loans may also have a prepayment penalty for early payoff.