You typically can pay off a car loan early if it makes sense for your situation but be sure to check your financial documents first to ensure that there’s no penalty for prepaying the loan. If there are no penalties for prepayment and you find yourself in a better financial position than when you purchased the car, it can be a good idea to pay more than the minimum or pay off the balance entirely. This is because larger payments will help you lower the amount you’ll pay in interest throughout the life of your loan, which is especially true for longer term loans where you’re scheduled to pay more in interest. Larger payments can also help with preparing for a “rainy day.” Many institutions will push your next payment date back a month each time you’ve prepaid a month’s worth of balance. Over time, you can find yourself several months ahead of your next payment date, which could be useful if you lose your source of income or incur any unexpected expenses. However, it’s important to note that your loan balance will continue to accrue interest if you pause payments for a period.