Woohoo! 5 Quick Things To Do When You Pay Off Your Car [Checklist]

paid off car

Did you just pay off your car loan? That’s awesome! We recently did too. Fist bump to you, my friend.

I wanted to share it publicly, so 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.

Feels good, man!

I appreciate all the congrats tweets you guys sent back.

The interest rate on my car loan was just way too high. I’m so happy we can begin thinking about prepaying some of the student loan debt that’s been around way too 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?

It feels really good to have paid off this debt. If you just paid yours off, I’m sure you’re pumped as well.

Anyway, in a response to my tweet, a friend 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.

Before I dig into these next steps, however, 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. 😉

Alright, here’s your “I just paid off my car” checklist:

1. Re-Assess Your Budget

Since you no longer have that car loan debt payment, make sure you designate a new home for that money.

Don’t just let it get absorbed into your frivolous spending. You wouldn’t want to just start wasting that new found money and never designate it towards any other financial goals.

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!

Speaking of budgets, if you’re not doing one already, you should consider doing so with a program like Personal Capital (read my review), YNAB, or any one of the other budget software options.

I started using a budget shortly after I decided to pay off my credit card debt. Even though I didn’t have much at the time, a budget was what I needed just to stay on track for a little while until I got some financial momentum.

You don’t have to budget forever (although some folks swear by it); you can simply setup Personal Capital with all of your accounts, make a plan to spend and or payout certain amounts each month and then see how you do.

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2. Designate a Place for Your Extra Funds

Was this your last remaining debt? Maybe it’s time to switch your mindset (and actions) toward saving and investing.

If you decide to start saving or investing those new found extra funds, be sure to find a good, safe home for them. But also consider that you might want your money working for you.

A no-brainer approach would be to store some of this new found cash in a high-interest savings account designated for an emergency fund or holiday savings account. 

There are plenty of FDIC insured online savings accounts paying really good rates. See some of these options in the table below:

Another option would be to start investing with these extra dollars. Maybe you already have an emergency fund and you want to start participating in this nice bull market we’ve been having?

Investing your money comes with risks, but by diversifying your investments and dollar-cost averaging, you can reduce some of your risks and see your money grow.

If you’re interested in more of an active investing approach I would consider this recommended list of the best stock brokers.

If you’re more into a passive approach, these new robo-advisor options might be a good choice.

Of course, there are simple investing apps like Stash where you can start investing in singles stocks that you know and love for as little as $5.

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3. Lower Your Car Insurance Costs

Your insurance coverage could be lowered. Call or email your agent and see what they can do.

In some instances, if your car is really old and not worth much, it might make sense for you to drop comprehensive coverage. I’m not an agent though and I don’t know you’re particular situation, so please consult a professional.

But the truth is, the finance company (i.e. the lienholder) doesn’t get to tell you what to do here anymore. You can get any type of auto insurance you want as long as you meet your state’s requirements.

I highly recommend also running a quote (from someone other than your current insurance agent/company) to see if you can get more affordable auto insurance elsewhere. Who knows what will come back?

Liberty Mutual is one of the most trusted companies and has some of the best auto insurance rates. Run a free quote right now and see how much you could save on your car insurance.

4. Get Your Title and Store It Safely

Getting your title once you pay off your loan can actually take a long time. Try to avoid putting yourself in a situation where you need it fast (like selling the car).

Some states have the lien holder (the company that you made loan payments to) physically hold the title. If you’re in one of these states, you’re likely to get your title back pretty fast (as soon as your payment clears and they have time to notify the department of motor vehicles in your State).

Texas Car Title Sample - Get Your Title When You Pay Off Your Car Loan

For more information on getting your title, see http://www.dmvlist.com/.

Once you get your title, store it in your home safe…not in the car itself. Go ahead and snap a picture of the title too just so you have a digital copy for quick reference.

Lastly, be sure to check your credit report with a service like Credit Sesame and ensure that your car loan is listed as paid off.

This may take some time. So don’t worry if it takes a couple of months.

5. Turn Your Car Into a Money-Making Machine

Now that you own your car free and clear consider using it to start a little side-hustle to bring in extra money.

I love this idea because you’re really flipping the script on your finances – going from debtor to side-hustler, baby!

You could start driving with Uber or Lyft. Your car does have meet a minimum year model depending on the city you drive in, but I know a lot of people who do this simply on their commute.

Looking for something more passive? Consider a service like Turo, where you turn your car into a rental car. You decide when you want to rent it out.

How cool would it be to make extra money with your car when you’re not using it?

Is It Always Good to Pay Off Your Car Loan Early?

One other area that’s often touted as a benefit is that you are escaping the interest charges on the loan. The general advice is to look at your interest rate, for example 7.5%, and say, “your money could be doing more for you each month if it weren’t tied up in those loan costs of 7.5%.”

But what if you are in your final years of a 5 or 6 year loan? Does the fact that you aren’t paying near as much interest each month in actual cash outlay now make a difference in your decision? Let’s look at this example. Back in July of 2006 you borrowed $15,000 at 7.5% for 5 years to pay for a car. Here are the first and last year amortization schedules:

Car Loan Amortization Schedule - Year 1

Year 1 of the car loan.

In the first year of this car loan, you pay over a third of the financing costs.

Car Loan Amortization Schedule - Year 5

Year 5 of the car loan.

In the final year, you only pay just $163 to finance this car. So even though you are still paying annual interest of 7.5%, the actual cash outlay is nowhere near what it was in the first two or three years.

Does it make sense then to pay the car off early (at 48 months for example), just to save $163? Am I reading the numbers right? Should this be a factor?

From my experience, paying off a note early had more to do with my cash situation over anything else. If I have enough cash, I don’t want to have debt, regardless of the interest rate. I want the payment out of my life, and I want complete control of the asset. If I’m short on cash or trying to build cash reserves, I’ll hold on to some reasonable debt (i.e. 7.5% car loan).

Final Thoughts on Paying Off Your Car Loan

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.

With your new extra income, you can now afford to buy something you’ve been putting off -like a fun vacation, a big donation to charity, or something nice for a loved one.

Can you think of some other things to do when you pay off the car note?

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.


  1. Carl Frederick says

    First, PT, congratulations on paying off the debt!
    Sorry to be the conspiracy realist, but you still do not own the vehicle.  In fact, you own nothing.  No American citizen taxpayers own any property, period.  The illusion of ownership exists, but in reality, you do not own your vehicle.
    Well, then who does own it?
    Refuse to pay your car taxes, and you will quickly discover who really owns the automobile.  Ownership implicitly implies complete control of and possession thereof.  How can you own something, but the local/state/federal government can seize it, and possibly attack your character, fine you with financial penalties, and potentially even arrest you and hold you against your will?
    What if you refused to pay fines from parking tickets?  What if you refused to pay moving violation fines?  What if you decided you would rather not pay for a registration of your vehicle, refuse to pay for emission testing, etc.?

    Please stop and consider this.  Now, apply what I just stated above, to your home.  

    You own nothing, because slaves are not allowed to own property.

    This is not an argument about the “moral obligation” to pay property taxes, so roads and schools and fire fighters and police can function, all considered necessities for a civil society.  The argument is ownership.  And if you refuse to do something (exercising your free will, disallowing coercion), in this case, paying money to an government entity, and as a result of your free will decision, your property can and will be confiscated; in plain words, stolen.  This can not possibly be true if you are the owner.

    Peace be with your spirit, please consider my words.

  2. Should you payoff a 2.49% $6,500 car note that is scheduled to be paid off in 14months?  not strapped for money right now.  Just trying to decide whether to put my cash in my investment accounts or pay off the note then make these payments towards my investment accounts.  Decisions, decisions?

    • Philip Taylor says

      @YR Yeah, that’s a tough call. I think you need to factor in things like how happy you’d be to be debt free of the car note. There are more emotional factors here than technical/financial ones. Dave Ramsey says to help sort this out in your mind, ask yourself if you would take out a 2.49% loan to invest with? If you wouldn’t, then you probably should get rid of the debt.

      • @Philip Taylor Thanks.  I have been visiting a few other website by far this is the easiest to understand from my perspective.  I appreciate the reply.  I will be paying off the car loan and sending the payment directly to my investment accounts.

  3. I found this blog by searching Google for “What happens when you’re done paying off a loan”. I see from your blog that there are no additional steps to do for that loan after it’s paid off… i was sure there would be, considering all the crap you have to do to get it. Maybe a “Good-bye!” or “Congrats” from the lender 😛

    Anyway, congrats on your loan payoff!

  4. 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.

  5. Thanks, Elliot!

  6. 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.

  7. karla (threadbndr) says

    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.

  8. I would call my State’s dept of motor vehicles and ask them. They should have a process for this.

  9. 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

  10. Mr. Plasectomy says

    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!

  11. Gooooooooooood work son! It’s a might fine day in your neck of the woods – soak it all up 🙂

  12. Ummm….that was the second most awesome rap I’ve ever heard (first place goes to PTMoney’s PYF challenge rap, of course).

  13. 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!

  14. 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.

  15. Congrats! My advice it to take the (former) car payment and split it between paying off debts and saving/investing.

  16. 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!

  17. The Happy Rock says

    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.

  18. 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!

  19. Credit Cards UK says

    Thanks, that’s excellent advice.

  20. 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 🙂

  21. 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.