Getting your 10-day payoff statement is an important step in refinancing your student loans. Here’s why: When you get approved for a refinance, your new lender pays off your old loans. That doesn’t happen instantaneously, though – the loan payoff takes at least 10 days. And it can take 1-3 weeks after that for the payment to be fully processed.
This can be tricky, since loan interest accrues daily. Getting a 10-day payoff letter ensures your new lender sends enough money to your old lender, and you’re not left with an outstanding balance at the end of your refinance. You can pay off your loan in 10 days, and here are some easy steps to make the process go as smoothly as possible.
A 10 day payoff on a car loan refers to the total amount needed to pay off the entire loan balance within 10 days. This includes the current principal balance, all accrued interest, and any additional fees. Knowing your 10 day payoff amount is crucial if you want to pay off your auto loan early or are looking to trade-in or sell your car. In this comprehensive guide, we’ll break down everything you need to know about 10 day payoffs on car loans.
What is a Car Loan Payoff?
A car loan payoff is the total amount required to settle your auto loan and satisfy the debt, This payoff amount comprises
- Current principal balance (amount originally borrowed)
- Accrued interest since your last payment
- Any late fees or other charges
The payoff amount shows how much you owe at a certain point in time. It changes every day because interest is added to the principal balance.
Why is it Called a 10 Day Payoff?
The “10 day” timeframe is how long the payoff quote is good for. Lenders work out the exact amount that needs to be paid back in 10 days.
This is how much interest will be added over those 10 days. It gives you extra time to make the payment after getting the 10-day quote.
The 10 calendar days start from the date the lender generates the quote, not when you receive it. So act fast once you get the exact payoff figure.
When Do You Need the 10 Day Payoff Amount?
There are a few common scenarios when you’ll need to request the 10 day payoff amount:
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Paying off your loan early – The 10 day payoff amount ensures you pay the full balance owed when making an early payment. This avoids underpaying and leaving a remaining balance.
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Getting a new car loan? Your new lender will need the 10-day payoff amount to pay off the old loan. This keeps you from having gaps where you owe money to both lenders.
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Selling or trading in your car – The buyer pays the lender the 10 day payoff amount directly to acquire the vehicle free and clear.
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Canceling gap insurance – Gap insurance contracts require your loan to be paid off first. The gap insurer needs the 10 day payoff amount.
How is a 10 Day Payoff Calculated?
Lenders use a simple formula to calculate your 10 day payoff amount:
Current Principal Balance
+
Accrued Interest (from your last payment due date to the payoff date)
+
Late Fees/Other Charges
=
10 Day Payoff Amount
This provides the full payoff figure valid for the next 10 days. The main variables are the current principal balance and the per diem interest.
How to Get a 10 Day Payoff Quote
Getting a 10 day payoff quote for your car loan only takes a few minutes:
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Call your lender’s customer service line and request a 10 day payoff amount.
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Login to your online account portal and generate a payoff quote.
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Email your lender asking for the 10 day payoff amount.
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Visit a local branch and speak to a representative in person.
Provide your account number and intended payoff date. The lender will calculate and provide the 10 day payoff amount.
What Happens After 10 Days?
The 10 day payoff quote expires after 10 calendar days. If you don’t pay off the loan within that timeframe, the quote becomes invalid.
You’ll have to request an updated 10 day payoff amount from the lender. The new quote will reflect any interest and charges accrued after the initial 10 day period.
There is no limit on requesting updated 10 day payoff amounts. You can get as many quotes as needed to pay off the car loan.
Benefits of Knowing the 10 Day Payoff
Paying off your auto loan using the 10 day payoff amount provides several benefits:
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Avoid underpayment – The quote ensures you pay the entire payoff balance, preventing remaining loan obligations.
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Accurate payoff timing – The 10 day timeframe accounts for per diem interest, so the old loan is satisfied in full.
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Efficient loan transitions – The exact payoff amount smooths the process of refinancing or selling your car with a loan.
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Interest savings – Paying the full amount stops interest accrual sooner, saving you money.
Drawbacks to Consider
While useful in many cases, some potential drawbacks to the 10 day payoff include:
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Expiration date – The quote expires after 10 days, requiring an updated amount if you miss the window.
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Prepayment penalties – Some loans charge you extra fees for paying off early.
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Opportunity cost – Paying off debt may be better spent elsewhere if you have higher interest loans.
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Lost loan history – Paying off early reduces your length of credit history with that lender.
The Bottom Line
Clearly understanding what a 10 day payoff on your car loan entails can help you make smart financial decisions. When you need to pay off, refinance, sell, or trade-in a vehicle with an outstanding loan, be sure to get a 10 day payoff quote from your lender. This ensures you can act quickly and accurately settle the debt during the 10 day validity period. With this comprehensive guide, you can now handle 10 day car loan payoffs like a pro!
Day 1-3: Wait for the cooling period to elapse
Now your lender must wait three business days (this excludes weekends and Federal holidays) by law before sending your payoff checks. This is known as a cooling period and it is a time where you have the right to cancel your new loan.
Specific payoff amount for each loan
If you’re paying off some but not all of your existing loans, you’ll need the 10-day payoff quote for just the specific loans that you’re paying off. You may need to call your servicer to get this amount if it’s not broken down by individual loan on your statement.
Be sure to double-check your account number when you’re entering this information. A typo could mean a check is applied to another borrower’s account, or a delay — both of which you want to avoid. In some instances, you may also be asked to provide the last four digits of your Social Security number to verify your identity.
Sometimes it’s difficult to find this information. If there’s any doubt, call your servicer directly to confirm. The better the information they get up front, the easier the payoff process is.
You may also need to provide your new lender with your loan number, which is different from your account number. If you’re refinancing more than one loan, you’ll need to provide the loan numbers for each one. Again, if you’re paying off some but not all of your student loans, let your lender know to avoid confusion.
How To Way To PAY OFF Your Car Loan in HALF the Time!
FAQ
What is a 10-day payoff for an auto loan?
When you pay off an auto loan in 10 days, the lender will give you a quote that includes the current balance plus interest that has been added for 10 days. You would have to pay this much to fully settle the loan and get rid of the lien.
Why is 10-day payoff more than balance?
A 10-day payoff amount is higher than the current loan balance because it includes accrued interest for the 10 days following the statement date, as well as any outstanding fees or escrow adjustments.
How does an auto loan payoff work?
Your payoff amount is different from your current balance. Your current balance might not reflect how much you actually owe to completely satisfy the outstanding loan balance. Your payoff amount includes the payment of any interest due through the day you intend to pay off your loan.
What is 10-day loan pay off carvana?
A 10-day payoff statement is a document from your lender that gives us the payoff amount to purchase your vehicle, including 10 days worth of interest. We need this document in order to finalize your trade-in or sale.