After you pay off a car loan, yougain full ownership of the vehicle, and the lienholder can be removed from the title. Beyond that, there鈥檚 not much you need to do. The process to get a free and clear title varies by state.
People also ask
What should I do after my car loan is paid off?
Some of the steps you should take once your car loan is paid off include reviewing your budget and insurance, obtaining the title, and checking your credit score. Before I dig into these next steps, however, give yourself a good pat on the back for knocking out this debt.
Does paying off a car loan affect your credit?
While the effect to your credit should be minimal after paying off a car loan, it will depend heavily on your individual credit situation. In other words, the effect on your credit will likely be different than it would be to someone else鈥檚. But don鈥檛 worry.
What happens to Your Car title when you pay off loan?
鈥淎fter you鈥檝e paid off your auto loan, you鈥檒l have a 鈥榝ree and clear鈥?vehicle title, meaning you now fully own your car,鈥?says Julie Shinn, vice president of lender management at RateGenius. 鈥淎nytime there are ownership changes, you have to update the title.鈥?Does the process differ by state?
Why did my credit score drop after paying off my car?
When you pay off an installment loan like a car loan, but still have high balance credit cards which are considered revolving debt, it may result in a negative impact on your credit utilization and credit mix. Another reason you may see a decrease in credit score is if your car loan was your oldest credit account.