How soon should I pay off my car financed through VW?

Not TDI-specific but I just purchased a car last month and financed $23,000 through VW Credit in order to get the cheapest out the door price ($25,000 minus $2K down payment) for the car. My intention the entire time is to buy out the car at the soonest opportunity.

I received my first account statement in the mail yesterday and the payment is due early November. When I went online to VW Credit's website, it showed my payoff amount is $23,077 (I guess that $77 is interest).


I can and would like to pay off the car now, but heard the dealership takes some sort of financial penalty from VW if the customer pays off the car too soon. Is that true? I just want to minimize any interest paid on this car but don't want to hose over the dealer who really got me a great price and delivered the car 2 hours away for free.

Being debt free is the quickest path to being wealthy...

Pay it off. Your paying $77 a month in interest. Don't worry about the dealer they have made there money on the car and on the loan that you took and any kickbacked from the MFG. So they have made plenty.

I worked in a Audi dealer for 8 yrs and a Chrysler dealer for 3 so I have some experience with dealerships.

What's the interest rate on the loan?

$77 in a month x 12 = $924, divided by your principal gives 4%, which is plausible (and decent).

If you can do something with that cash which pays better than 4% after taxes, do that instead and don't pay off the loan.

If you have other debts that have a higher interest rate then pay those off first.

If the cash is otherwise just sitting around not doing (or earning) much, then pay off the loan.

I owe $16k on a car currently worth probably half that (due to high annual mileage) because I could get 0% interest for 7 years on the loan, and at that rate, even though I could pay it off, I'm not going to, until the loan expires on its own.

GoFaster said:

What's the interest rate on the loan?

$77 in a month x 12 = $924, divided by your principal gives 4%, which is plausible (and decent).

If you can do something with that cash which pays better than 4% after taxes, do that instead and don't pay off the loan.

If you have other debts that have a higher interest rate then pay those off first.

If the cash is otherwise just sitting around not doing (or earning) much, then pay off the loan.

I owe $16k on a car currently worth probably half that (due to high annual mileage) because I could get 0% interest for 7 years on the loan, and at that rate, even though I could pay it off, I'm not going to, until the loan expires on its own.

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Interest rate is 4.9%. I was looking through some emails I exchanged with the dealer and they indicated that after 3 months of payments I can pay off the loan in full. I really don't want to pay an additional $154 in interests if I can help it.

Just for Sh!ts and giggles, how much money do you think the dealership miss out on if I paid off my loan immediately?

Who cares? It isn't your responsibility to look after the dealer. I just paid off all my debt including my house, except for the zero percent loan from VW on my 2015 stop sale Beetle TDI. No need to pay off something that costs me nothing, and the money is better invested elsewhere. Pay off your car and any other debt tomorrow if you can. Debt is the modern form of slavery.

I processed the first and final payment last night!

Excellent! One of the best days of your life is when you are debt free and can make your way paying for things with cash. Now start saving/investing that money instead of paying it out to someone else.

I've also heard that the dealer gets penalized for early payoff, but my dealer didn't mention it when I leased my '15 GSW. I paid the lease off about three months after taking delivery. Was going to do it immediately, but a few months later was more convenient. I wouldn't worry about the penalty, honestly.

Do make sure VW Credit sends you the title. I discovered by chance that they had never sent the title after I paid off my '02 Wagon, ten years after I paid it off. They still had it, fortunately.

Lightflyer1 said:

Excellent! One of the best days of your life is when you are debt free and can make your way paying for things with cash. Now start saving/investing that money instead of paying it out to someone else.

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Yes, for the most part. But 1.99% financing with my CA$H sitting in a savings account collecting 2.25% interest rate allows my car to double as an emergency fund. And I play the use reward credit cards for everything and pay in full every month game too. And I use leverage to make money in real estate. But your point is a good one and I really look forward to paying off our mortgage. Refinancing from a 30-year to a 15-year mortgage was probably the smartest financial move that I ever made.

I went from a 30 to a 10 to another 10 year at 1.9% on my home. Just reducing the interest rate. Saved enough to pay the last 10 year loan off in only 5 years. Cut 16 years off the total 30 year initial note. As I said earlier my car is VW financed at zero percent interest and the money goes into my retirement and savings and investments. There is a time for good use of credit, but not as most people use it today. Nearly 60% of my pay goes into savings/401k and investments now.

Today. I only financed one car and that was my 04 golf. Never again if I can help it. I follow Dave Ramsey as much as I can. Almost done with my wife's student loans. I can't wait for the day I am totally debt free. Only car I would ever get a loan o. Would be a 100% self driving car. I drive 1 hour each way to work and then have a 12.5 hour shift. I would snooze in the back. Meanwhile I will keep buying other peoples old "junk". I view them like wine where they get better with age. Issues are found and solved and people have write ups on how to do the fixes along with cheaper parts cars out there. New cars you have to blaze that maintenance trail for the first time.

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It's YOUR money..... The Dealer got your money already!

Lightflyer1 said:

Excellent! One of the best days of your life is when you are debt free and can make your way paying for things with cash. Now start saving/investing that money instead of paying it out to someone else.

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I went into retirement debt free and it is amazing how much farther your money goes. Paying someone else to use their money really erodes your buying power and is one of the stupidest things you can do. I don't worry about my credit score because it's irrelevant, although last time I checked, it was in the 800's. I even went so far as telling my credit union that I wanted to cancel my credit card. They said OK and sent me another one anyway.

It is just hilarious that someone would worry about a dealer whose whole existence is to bend you over and rail you just as hard as they can get away with. But I guess that even abuse victims develop a symbiotic relationship with their abusers.

I thought it was cool that a guy was willing to honor a deal he made even if it cost him a few month's interest.