When you have an outstanding auto loan, the lender places a lien on the vehicle title. This gives them security interest until the loan is fully repaid If you want to pay off your car loan early and get the lien removed, you need to request a 10-day payoff quote from the lender
The 10-day payoff is the exact amount needed to satisfy the loan and obtain a clear title within a short timeframe. This payoff amount differs from your current loan balance. Read on to understand what a 10-day auto loan payoff is, how to get it, and what paying it off entails.
What Does 10-Day Payoff Mean?
The 10-day payoff amount includes
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Remaining Principal – The outstanding principal loan balance.
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Accrued Interest – All interest accumulated up to your next due date.
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Fees – Any late fees or charges incurred on the loan,
Essentially, it is the full payoff figure valid usually for the next 7-10 days. This allows you a short window to send the payment after getting the quote.
How Does 10-Day Payoff Differ from Current Balance?
Your current auto loan balance only shows principal still owed. It does not account for unpaid interest that keeps accruing daily. Here’s an example:
- Loan Amount: $15,000
- Interest Rate: 5%
- Monthly Payment: $300
- Current Principal Balance: $10,000
If you check today, the balance is $10,000. But calculating accrued interest, the 10-day payoff could be $10,150.
Paying the $10,000 current balance will leave $150 still owed. Only the full 10-day payoff satisfies the loan completely.
Why is a 10-Day Quote Required?
Since interest keeps accruing, the payoff amount changes daily. Lenders cannot provide an instant exact payoff figure.
By requesting a 10-day quote, you get a fixed payoff amount that is valid for 7-10 calendar days. This window gives you time to process payment. If the deadline passes, you must request an updated quote.
How Can I Get a 10-Day Payoff Quote?
Contact your auto lender directly to request a 10-day payoff figure. Most lenders provide quotes through:
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Online account – Log into your account on the lender website. There may be a payoff quote link.
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Mobile app – The lender app may have a payoff calculator tool.
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Customer service – Call the lender helpline and speak to a representative. Ask them to email you the official payoff quote.
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Online form – Some lenders have online contact forms to request a 10-day payoff.
Note that credit unions and smaller lenders may only provide quotes by phone or mail.
Provide your account number and ask for a written quote specifying the deadline. Save this document to later verify the payoff amount.
How is a 10-Day Payoff Calculated?
Lenders determine the 10-day payoff using this formula:
Principal Balance
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Interest Accrued to Next Due Date
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Outstanding Fees
- Reserve Interest Credit
= Total 10-Day Payoff
The reserve interest credit accounts for overpaid interest if you pay before your next due date.
Online auto loan calculators can also help estimate your payoff amount. But the lender quote will be the definitive figure.
Can I Make the 10-Day Payoff Using My Regular Payment?
No, you cannot use your usual monthly loan payment amount for the 10-day payoff. The monthly payments only cover principal and some interest.
To fully pay off the loan within 10 days, you must pay the specific quoted payoff amount, which will be larger than your regular monthly installment.
What Happens If I Miss The 10-Day Deadline?
Don’t worry if you miss the original 10-day deadline. The payoff quote simply expires.
You will then need to contact the lender again and ask for an updated 10-day payoff amount. The figure will change slightly as interest continues accruing.
There are no penalties for paying after the quote validity. But only the new quoted amount will pay off the total loan.
How Do I Pay the 10-Day Payoff Amount?
You can pay the 10-day payoff in a few ways:
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Online payment – Many lenders allow online loan payoffs using e-Check, debit card or bank transfer.
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Cashier’s check – Get a certified check and mail it to the lender address provided.
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Wire transfer – Wiring the funds directly to the lender account pays off the loan fastest.
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Personal check – You can mail a regular signed check, but funds will take longer to clear.
Always reference your loan account number to credit the payoff properly. Keep documentation showing payment processing and confirmation.
What Happens After I Pay the 10-Day Payoff?
Within a few weeks of the lender receiving payoff funds, here’s what happens:
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The lender sends you a paid-in-full letter confirming the loan is satisfied. Save this document.
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Any lien on the vehicle title is released.
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The lender informs your state DMV that the lien is removed.
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You receive the vehicle title from the DMV, now lien-free.
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Your loan account is closed and credit report updated, improving your credit score.
If you don’t receive confirmation after 2-3 weeks, follow up to resolve any issues. Don’t wait too long before ensuring the lien release process is moving along.
What are Some Benefits of Paying a 10-Day Payoff?
Paying off your car loan early using the 10-day payoff quote offers many benefits:
Saves on interest costs – Eliminating loan interest charges saves you money overall.
Frees up cash flow – With no monthly car payment, you have extra cash each month to use elsewhere.
Boosts credit score – A paid auto loan improves your payment history and lowers credit utilization for credit score gains.
Allows selling the car – You can sell the vehicle and transfer ownership once you have the title free of any liens.
Gives a sense of ownership – Full ownership feelings come once the title is totally in your name.
Reduces insurance required – With no lienholder, you may be able to decrease auto insurance coverage required.
Eliminates debt faster – Accelerating payoff helps you meet financial goals like being debt-free sooner.
Just be sure potential interest savings exceed any prepayment penalties the lender may charge.
What Should I Do with the Lien Release Letter and Title?
When you receive lien release confirmation and the new title, take these steps:
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Make copies of both documents for your records before doing anything.
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If you plan on keeping the vehicle, store the title securely as proof of full ownership.
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Add the lien release letter to your loan records. This document verifies the payoff date.
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If you are selling the vehicle, sign the title over to the new owner. Provide both title and lien release when transferring ownership.
Never hand over vehicle titles until loans are fully paid off. The 10-day payoff allows a clear title exchange.
5 Tips for an Easy 10-Day Payoff Process
Follow these tips to ensure your car loan 10-day payoff goes smoothly:
1. Confirm payoff details – Verify the payment deadline, payee name, mailing address, and any online payment account numbers.
2. Pay via certified funds – Use a cashier’s check, money order, wire transfer, or online payment with confirmed transaction number.
3. Keep documentation – Retain physical or online copies of your payoff quote, payment processing, receipt and title lien release.
4. Follow up with lender – Contact the lender if you don’t receive a lien release notice and title within 15-20 days post payoff.
5. Notify your insurer – Inform your auto insurance company when the loan is paid off so they can adjust your policy if needed.
With attention to detail, your lender will handle the payoff smoothly. But monitor progress closely until the title arrives.
Alternatives if Payoff Funds Are Short
If you lack sufficient funds to cover the full 10-day payoff amount right now, consider these options:
Pay extra monthly – Making additional principal payments will gradually reduce the balance.
Take a personal loan – An unsecured loan may provide funds to cover the shortfall. Compare rates carefully first.
Use a 401k loan – You may be able to borrow against your 401k balance and avoid early withdrawal penalties.
Get a cash-out refi – Refinancing into a longer
How to request a 10-day payoff letter
Most student loan lenders allow you to request a 10-day payoff by signing in to your online account. However, not all do, so you may need to call or email your loan servicer. If you must request your 10 day pay-off from your lender directly, you will need to provide some basic information, including:
- Your loan number
- The address where the 10-day payoff letter should be sent
You will need to ask each individual loan servicer that you have what your 10-day payoff amount is. That means if you have six loans you are refinancing, you would need to get a 10-day payoff letter from each of the six lenders.
The 10-day payoff is calculated based on calendar days; it is not based on business days. In some cases, you will need to specify the dates for your lender. Make sure you calculate correctly so your loan servicer gives you the accurate repayment amount.
What is a 10-day payoff?
When you owe money on student loans, interest accrues on those loans every single day. So if you want to pay your balance off in full, you cant just send in the amount from your last statement balance or even the total amount due that is displayed on your online account.
Instead, you need to get a 10-day payoff estimate from your current lender. You can sign in to your online loan account to request a 10-day payoff letter, and your loan servicer will tell you the 10-day payoff amount. This amount equals:
The current balance due on your loan
+ Any interest that accrues on the principal balance over the upcoming 10 days
You will need to provide the 10-day payoff letter to your new loan servicer during the refinancing process. This letter will determine the exact amount that is sent to repay your current student loan balance in full.
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FAQ
Why is 10-day payoff more than balance?
That’s because the difference likely is because of the way the interest of your loan is calculated. Basically, your balance is what you currently owe, and your payoff is what you owe plus interest that accrues from the statement date and a specific payoff date.
What is a 10-day payoff letter from a current lienholder?
A 10-day payoff letter is a document issued by a lender or creditor that provides the exact amount of money required to fully satisfy an outstanding debt or loan balance within a 10-day period. This letter includes the principal amount owed, any accrued interest or fees, and any other charges that may be applicable.
Is there a 10-day grace period for auto loans?
Car loan grace periods vary by lender and generally range from 10-15 days. For example, if your auto loan payment is due on the 15th of the month, and your lender has a 10-day grace period, you would not be charged a late fee if you pay by the 26th of the month. Most but not all auto lenders offer a grace period.
Is it wise to pay off a car loan early?
Paying off a car loan early can save you money on interest and improve your debt-to-income ratio. Early loan pay-off can also give you ownership of the vehicle sooner and reduce the risk of being upside-down on the loan. Before deciding to pay off your loan early, consider if your money could be better spent elsewhere.
What is a 10-day payoff on a car loan?
The 10-day payoff includes any interest you owe through the date of your last installment payment, including any additional fees you may have incurred. A 10-day payoff tells you how much money (including interest) you’ll need to pay to have your car loan entirely paid off. This amount will differ from the balance you currently see on your loan.
What is a 10-day payoff on a refinance?
A 10-day payoff refers to the time it takes for your new lender to pay off your old loans during a refinance. This happens with any loan you refinance, whether that’s a home loan, auto loan, personal loan, or student loan with Earnest. How do I calculate my 10-day payoff?
What is an auto loan payoff quote?
An auto loan payoff quote, sometimes called a 10-day payoff, states how much you need to pay off the loan balance. In order to sell a vehicle you owe money on, you need to request a loan payoff amount from your current lender.
What is a 10 day payoff?
The 10-day payoff includes any interest you owe through the date of your last installment payment, including any additional fees you may have incurred. What does request a payoff mean? Your payoff amount is how much you will actually have to pay to satisfy the terms of your mortgage loan and completely pay off your debt.
What does payoff mean on a car loan?
Your payoff amount is different from your current balance. Your current balance might not reflect how much you actually have to pay to completely satisfy the loan. Your payoff amount also includes the payment of any interest you owe through the day you intend to pay off your loan. Is it good to pay off car loan early?
Do I need a payoff quote If my car loan is still open?
When you’re ready to buy a new car and get rid of your old one, you need to request a payoff quote from your lender if your old loan is still open. An auto loan payoff quote, sometimes called a 10-day payoff, states how much you need to pay off the loan balance.