Is foreclosure/prepayment allowed on used car loans?

Assuming you've taken a used car loan, are you thinking about paying off that loan either partially or in full before the due date? Most lenders will allow it, and the method to do so is called 'foreclosure' if you are paying off the entire loan, or 'prepayment' if you are paying part of the outstanding amount is relatively straightforward. You will usually need to send a request online, or attend a branch, and your lender will walk you through the process.

Now, a few points regarding charges. In many cases, lenders will apply a prepayment, or foreclosure, penalty in the event of clearing the loan early, especially if you pay it off early in the loan tenure. The reason for a penalty is quite simple, because by prepaying the loan, the lender loses interest which they were expecting to earn. They can offset the lost income by charging you a fee. For example, some banks apply either a flat rate or a percentage of the outstanding amount, however after a certain period, often two years or longer, these fees might drop significantly or be eliminated.