How to Figure Out a Payoff Amount on My Car

by Alexis Writing

If you want to pay off your car loan, you need to know the amount owed. This may seem simple, but you have to remember that each day, your loan is accruing interest. As a result, in addition to knowing the outstanding balance on your last statement, you also need to know how much interest has accrued since your last payment.

1

Ask your lender for the payoff balance. This is by far the simplest way to figure out the payoff amount on your car loan. But when the lender quotes you a payoff balance, find out what day that is good through. Since interest is accrued daily, you may have incurred a few more dollars in interest charges by the time your check gets to the lender, and the quoted payoff balance may not be right unless the lender has specified the payoff balance on the date the check will arrive.

2

Look at your principal and interest rate. If your lender can't give you a payoff balance for your car loan, you can figure it out yourself as long as you know your outstanding principal (the amount you still owed the last time you made a payment) and your interest rate.

3

Divide your annual interest rate by 365 to arrive at your daily interest rate. For example, if your annual interest rate is 10 percent, your daily interest rate is around .0003 percent.

4

Multiply your daily interest rate times the principal due at your last payment, times the number of days it has been since your last payment. This will give you the amount that you currently owe, including interest. You'll want to add a few extra days to give your check time to get to your lender.

About the Author

Alexis Writing has many years of freelance writing experience. She has written for a variety of online destinations, including Peternity.com. She holds a Bachelor of Arts in communication from the University of Rochester.