Paid your car loan off now what should you do?
Paying that last bit off your car loan is truly an amazing accomplishment for most of us. But despite this welcoming relief, it’s also the start of your life as the owner of your brand new vehicle. The repayments are finished and you now have more money to invest in your car’s performance, traveling down south or a road trip and so much more.
Before you get big aspirations of an extended road trip we have some more formal areas to tick off. In this article, we’re going to take a look at the aspects one needs to address after they have ended their car loan’s financing term.
Fill Out Your Vehicle’s Paperwork
The first and easiest thing that you need to take care of is the paperwork for your new vehicle – which basically just involves verifying signatures and information. In many places, the lien holder is the one who will notify the Department of Transport (or the equivalent entity) of this change in title. Once all of the required documents are cleared, the title should then be delivered to you.
Keep in mind that it can take a long time to get your title after paying off your car loan. That is why it’s important to not put yourself in a situation where you need it as soon as possible such as when selling a car.
One thing that can slow this down even more is when the title is sent to the wrong address. If you’ve changed places since you bought the car, it’s essential that you communicate the new details to your lender. You can also call them afterwards to confirm that the title is going to be sent in the mailing address you desire.
Keep an Eye on Your Finances
Many people can get used to sending money on a monthly basis even after they are done financing their car. This can make it feel like a windfall, and a lot of individuals can be tempted to splurge this on things they had been putting off. In this situation you should of already made sure that there was no shortfall or end of payment GAP Payment owed read more on that here.
However, it’s important to maintain financial discipline after the last payment for your car loan. Those who think ahead and save up the money they got used to spending each month can actually do themselves a huge favour when buying a new vehicle in the future. You should also remember that the credit score you have now is going to have a significant impact on the next car loan you get, so you might want to keep an eye on this too.
Update Your Car Insurance Policy Lien Holder
One of the next things that you should do immediately is to let your car insurance company know that you’re done paying off your loan. This is needed because they will then remove the lien holder which is noted in your car insurance policy. The great thing about this is that you don’t have to wait until you have the actual title on hand.
Getting your car insurance paperwork updated is important because, in case of an accident, the insurance payment will go to you instead of the lien holder. Although in any case the money will still be sent to you but doing this beforehand will make the process go a lot smoother.
There are also some instances where your car has gotten old enough where its value isn’t worth the same as it did before. It would make sense to have your comprehensive coverage lowered instead. You might want to consult an expert beforehand to make sure you’re doing the right thing.
Speaking of Car Insurance Coverage
After you have paid off your car loan, the level of your auto insurance coverage will now be up to you so long as the necessary requirements are met. It’s possible to decline a portion or all of the comprehensive coverage if you wish. The amount will most likely be substantial especially if you’ve just finished financing a brand new car.
You can significantly lower your car insurance payments if you decide to drop out of the comprehensive and collision coverage and just get the liability coverage instead. You’d have to weigh the pros and cons in such a choice especially with the possible costs in repairs against the savings you can get.
Out of the Box Option
Some people may ignore all the advice above and take a more splurge approach by upgrading their new car with performance tyres, spoilers, exhausts, and other assorted modifications. This can also be a form of celebration by upgrading the car look feel and performance.
Last but not the least, you may also want to reconsider the car insurance you have at least once or twice a year. This can be useful because it helps you ensure that your vehicle is still covered sufficiently by the terms and that you’re also paying an ideal rate.
If you want a second opinion on what to do you can contact our team here at Yes Loans for an expert financial opinion and get the industry professionals recommendations, Contact us.