Arizona Tribune - What to Do After You Pay Off Your Car Loan

Check Your Credit Score and Credit Report

Your auto loan is on your credit report. Each of the payments you made to the lender were recorded by the credit bureaus. If you made them all on time and managed other credit accounts responsibly, your credit score should improve. Check your credit report to see if this is true for you.

Many lenders will display your credit score on your monthly loan statement, so you can see the progress throughout the loan term. Credit reports are available from Experian, TransUnion, and Equifax, which are the three main credit reporting bureaus. There are also paid services that you can subscribe to for 24/7 access to credit reports.

Assess Your Insurance Needs

Lenders typically require that car buyers with auto loans carry a specific type of auto insurance. This is known as "Option 1" in some states or "Full Coverage" in others. It essentially means the car owner needs to protect the vehicle against fire, theft, or mechanical failure. The bank owns your car until you pay for it, so they want you to keep it in good shape.

When the loan is paid off, you can choose to downgrade your insurance coverage, provided the state you live in allows that. This could save you some money in insurance premiums, but it also cuts down on the coverage you have for your vehicle. Keeping fire, theft, and glass insurance on your vehicle is protection that could come in handy at some point.

Look for Your Car Title in the Mail

Some states allow lenders to hold the title to your car until the loan is paid off.

If you live in one of these states, your car title will have the lender listed as part owner of the car. You need to contact the DMV to have that removed.

If you don't live in a title-holding state, you may receive a clean car title at the dealership when you buy the car. It's important to understand that the title does not represent sole ownership until the auto loan is paid off. The lender will hold a lien on the vehicle, meaning you cannot sell the car while there's still an outstanding loan balance.

Allocate the Extra Money Elsewhere

You just paid off a car loan that may have been costing you several hundred dollars a month. What are you going to do with all that extra money? Allocating the extra money into a savings account or to paying off other outstanding debt are both great options. Using it to take your family on vacation is another. It's your money now. Use it for something productive or just have some fun with it.

SPONSORED CONTENT

Sources:
https://www.experian.com/blogs/ask-experian/i-paid-my-car-loan-now-what/

https://www.rategenius.com/paid-off-car-loan-now-what

https://www.credit.com/blog/you-just-paid-off-your-car-now-what-162738/

Contact Information:

Name: Sonakshi Murze
Email: [email protected]
Job Title: Manager

SOURCE: OneMain Financial

View the original press release on ACCESS Newswire

R.Chavez--AT