What Does the Maturity Date on a Car Loan Mean?
The maturity date on a car loan refers to the date when the finance contract expires and the loan is paid off. The maturity date is the final payment date. When referring to auto loans and leases, the maturity date is fixed, meaning the date the loan or lease reaches full maturity is set at the start of the loan.
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Significance
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The maturity date for an auto loan or lease is the final time you must pay the lender. In the case of an auto loan, you will own the vehicle free and clear upon the completion of the finance agreement. On an auto lease, the maturity date refers to the final date by which you must return the leased vehicle to a dealership.
Ending a Loan Before Maturity
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To end an auto loan before the maturity date, you must pay the remaining balance on the loan, plus any accrued interest that is not yet repaid. Contact your finance company to get an updated payoff amount before you send in a check to end the loan early. Most lenders provide a 10-day payoff, which means the amount quoted is valid for 10 days from when it was quoted. If more than 10 days elapse, you will be required to pay a per diem amount to cover interest for each additional day.
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Ending a Lease Before Maturity
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Ending a car lease before the scheduled maturity date requires paying the early termination amount to the leasing company. The early termination charge includes all remaining lease payments, plus a disposition fee assessed by the leasing company. If you consider terminating a lease shortly after starting it, you may be surprised to learn that the payoff amount is very high. For example, if you have a 36-month lease with $200 monthly payments, after one year of payments the early termination would still be $4,800.
Extending the Maturity Date
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Although no consumer wants to spread out his debt over a longer term than necessary, you may need to delay the maturity date of your loan or lease for financial reasons. If you have missed payments on your loan, the finance company may tack those missed payments on to the end of the loan by extending the term. You may also choose to extend your lease in the hopes that lease deals improve in the coming months. A dealership cannot help with extending your lease, so you must contact the lessor to determine if lease extensions are available.
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References
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