We Paid off the Car Loan
I announced on Twitter last week that we had paid off our last car loan, leaving us with only student loan debt and a mortgage. Sweet! I appreciate all the congrats tweets you guys sent back. (follow me @ptmoney)
It feels really good to have paid off this debt. The interest rate was just way too high. Now we can begin thinking about prepaying some of the student loan debt that’s been around way to long. We have high hopes for being able to do that this year, but want to wait and see what happens with the baby. Things will change a bit, right?
Anyway, in a response to my tweet, @Finc_Confluence (who blogs at Financial Confluence) tweeted in with this excellent point about car insurance:
“Consider evaluating your Ins. coverage. Requirements are higher when there’s a lien on the vehicle. Now, you can decide!”
This is a great point. It got me thinking about all the other things you should do once you truly own your car:
My “I Paid Off the Car” Checklist
Take Time to Celebrate – First, give yourself a good pat on the back for knocking out this debt. Consider a celebratory car wash and a photo op next to your car with the title in your hand. 
Re-Evaluate Your Insurance Coverage – As mentioned above, your insurance coverage *could* be lowered. Call your agent and see what they can do. I recommend GEICO. Get a FREE car insurance quote at GEICO.com.
Give a New Purpose for the Old Debt Payment (Adjust Your Budget) – Since you no longer have that debt payment, make sure you designate a new home for that money. Don’t just let it get absorbed into your frivolous spending. Decide whether you want to pay other debts with that money, or build up some savings? How great is it to have more breathing room in your budget!
Get Your Title and Store It Safely – Getting your title once you pay off your loan can actually take a long time. So don’t put yourself in a situation where you need it fast (like selling the car). Some states have the lien holder physically hold the title. If so, you’re likely to get it back faster. Once you get it, store it in your home safe…not in the car itself.
Enjoy Your Debt-Free Ride – Lastly, I’ll just add that you should count your blessings and soak up that paid off car feeling. That’s what I’m doing.
Can you think of some other things to do? While your thinking of some other things, enjoy this “paid my car off” rap from YouTube.
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Yay! That’s so awesome that you’ve paid that off. Looks like you’ll be able to take your baby home from the hospital in a paid-for vehicle! I’m jealous!
We have about $6k to go on our car loan, and then we’re done. Soon enough! And I’ll definitely take it for a celebratory car wash
Thanks, that’s excellent advice.
I love the idea of a celebratory car wash. I tend not to have my car washed because I don’t want to spend the money, but I know that it is good for the car to be clean once in a while. What an appropriate way to celebrate!
Awesome PT. We have been driving paid for cars for over 4 years and it is great.
You might want to think about saving for a replacement depending on the age of the car. It is much easier to save $50 a month for 5 years and have 13k rather than wait till the car is on its last legs.
Congrats! We paid off our car last year, and it felt great. We take the money and put it in a “car fund.” When our car dies, or needs repairs, we can just take the money from the car fund. What we’re really hoping for is that the car lasts long enough that we will be able to pay entirely with cash from the car fund when the time comes to purchase again.
You are so right about the lien! Make sure you get it either in your name or with a letter stating your loan was paid in full. I didn’t realize I was missing my lien when I traded in my car. The dealer was able to get it for a small cost but it was something that could have held up my purchase.
When I paid off my last car the money all went into savings each month. That felt great!
Congrats! My advice it to take the (former) car payment and split it between paying off debts and saving/investing.
We paid off my car in August of last year. But we ended up going into debt on my wife a newer car so we’re only saving an extra $100 a month which goes into paying off student loan debts.
Congratulations! That’s terrific!
When I paid off my car loan I continued to make a payment, but this time it was to myself. My savings account grew large enough that I’ve been able to pay cash for our last two cars (though I did put as much as possible on credit cards so I could get the reward, then paid it off immediately).
Because you do have a baby on the way I agree with your plan to not earmark the additional money towards paying off other debt yet, but I’d still likely throw an extra $25 a month towards principal while you wait and see (that is, if you have a sufficient emergency fund). You likely won’t miss it, and every little bit helps.
About changing your insurance coverage, remember that the only two coverages that have anything to do with the type of car you have are Comprehensive and Collision, as those are the only two coverages that are on the car itself. You don’t want to reduce your liability or uninsured motorist coverage, as they have nothing to do with the type of car you drive; you can do just as much damage with a brand new car as an old clunker!
You need to find out how much you pay for each of those coverages, and determine your deductible. Get quotes for raising the deductible and for eliminating the coverages altogether.
I suspect you’ll find that you won’t save as much as you think, especially with Comprehensive coverage. And if you remove them you will be completely out of luck if you get into an accident that is your fault, if it’s a hit and run or if the at-fault party doesn’t carry enough coverage to fix your car. Also, you’d have no coverage if it’s stolen, damaged in a hurricane, etc.
That’s almost an entire post right there, but believe it or not I have more to say on this subject. I’m going to write a post about this on my own blog, so look for it!
And once again, congrats for paying it off!
Ummm….that was the second most awesome rap I’ve ever heard (first place goes to PTMoney’s PYF challenge rap, of course).
Gooooooooooood work son! It’s a might fine day in your neck of the woods – soak it all up
Congrats! You must feel fantastic and I bet it just got a little bit easier to breathe.
1. I would give it a nice car wash and wax, complete detailing, unless you live in the great white north of winter and then I would give a nice car wash to get rid of the salt.
2. Fill it up! I bet all of sudden your miles per gallon will increase with out that payment.
3. Check the insurance to raise my deductibles or even get rid of the collision coverage depending on the age of the car.
Congratulations to you again! Very inspired by your success!
I paid off my Saturn yrs ago and never received the title to the car. We are trying to get rid of car but need title to do so.The place we financed with is no longer around. What can we do???? It frustrating. Thanks
I would call my State’s dept of motor vehicles and ask them. They should have a process for this.
re titles – they should be registered with your state or county. You can request a certified or replacement copy for a nominal amount. When you get it, there should be a place that lists any lein holders. Be sure that area is blank. If not, contact the lein holder to get a lein release.
Funny story. Paid cash for my last car, using a cashier’s check from my credit union. The dealership paperwork showed that there was a lein to the credit union. So AFTER the title was processed, I had to haul it to the credit union to get a release for a lien that never existed in the first place.
Another reason to bank at a local CU – bet I couldn’t have taken care of it over a lunch hour if I banked with a national ‘chain’ bank.
Way to go. I think so many people forget that a car is an expense. That is a nice burden to not have to pay every month.
Thanks, Elliot!
I’ll be done paying my car loan in November, can’t wait. But I hate that I’m already thinking of leasing a new car which will drain more money than my current car payment.