How to Pay Off Your Car Loan Early (& Never Pay for Your Car Again!)

How to Pay Off Your Car Loan Early (& Never Pay for Your Car Again!)

2 min read
Chris Prefontaine

Chris Prefontaine is a real estate investor with over 27 years’ experience in the field.

Chris is the bestselling author of Real Estate on Your Terms and founder of Smart Real Estate Coach and host of the Smart Real Estate Coach podcast.

He lives in Newport, R.I., with his wife Kim and their family. Chris operates the family business with his son Nick, his daughter Kayla, his son-in-law Zach, and an amazing team. Together, they co-authored the book The New Rules of Real Estate Investing, released in 2019.

Chris has been a big advocate of constant education. He and his family mentor, coach, consult, and actually partner with students around the country, teaching them to do exactly what their company does. Between their existing associates nationwide and their own deals, Chris and his family are still acquiring five to 10 properties every month and control between $20 to $30 million worth of real estate deals—all done on terms without using their own cash, credit, or signing for loans.

Chris and his family believe strongly in giving back to the community. They currently support Franciscan Children’s Hospital in Brighton, Mass., 3 Angels Foundation in Newport, R.I., and the Wounded Warrior Project by giving a percentage of all deals to those causes.

Chris has been featured on Joe Fairless’ Best Ever podcast, discussing high-level investing.

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When people ask me about whether or not they should pay off their car, it always leads to an interesting discussion.


As is super customary for me when writing articles, teaching, or speaking, I will not speak in theory or ideas but rather from personal experience.

Why not create an asset that can then pay for your car or other toys? Here’s what I did at the end of 2018.

Related: Why Getting Comfortable With Discomfort Is Key in Real Estate

Close up view of bookkeeper or financial inspector hands making report, calculating or checking balance. Home finances, investment, economy, saving money or insurance concept

Create a Cash-Producing Asset

I wanted to purchase a winter vehicle so I would not have to drive my convertible in the cold. But I hate buying cars, knowing they depreciate the second I drive off the lot. I especially hate it if I’m paying with after-tax dollars or even money from my company.

We were looking for a new office building in 2018. We found a property where the seller was willing to do owner financing. (This is one of three ways we buy—never using banks or signing personally on loans.)

He also had two existing tenants in the building that were paying 20-year-old rental rates. Both wanted to stay.

We structured a monthly principal payment that was a bit less than the total rent being collected the day we closed on the property. This meant it was cash flow positive immediately. That left us with two-and-a-half floors of space. Our company would take part, and we’d rent out the rest.

So without even filling the building, we were looking at a $3,000 or so positive monthly cash flow.

I then very conservatively went out and purchased a new Jeep for the winter so my convertible could remain in storage for the lovely New England winters. The Jeep payment is only $650 for 48 months. But with the positive cash flow from the building, we mail in an additional $250 principal. That way, we will pay it off sooner than the original amortization.

Related: Owning Your Own Office Is Easier Than You Think

Did we get an office building by sticking to our buying guidelines—not taking out a bank loan and not signing personally on any loans? Yes.

Did we create a positive cash-flowing asset that then can be used to buy a toy (i.e., Jeep)? Yes.

See, that’s what the wealthiest people do if you study them. They create assets to pay for their toys. They never pay for toys out of after-tax profits.

Should you pay off your automobile loan early? No.

Should your cash-producing asset pay off your automobile loan early? Why not?!

If you learn how to buy on terms, you can learn how to create cash-producing assets that can pay for everything else.

How much is your car payment? Are you trying to pay off your car loan early?

Share in a comment below!