Is there a penalty for paying off a car loan early?

Many auto loans have no prepayment penalty, but some do, and rules vary by state. Look for a 'prepayment' section in your retail installment contract. Some older or subprime loans use precomputed interest methods, which can reduce the savings from paying early. If you're unsure, ask your lender directly how early payoff is calculated. The CFPB at consumerfinance.gov has plain-language guides on reading auto-loan terms.