In ON, what should I know about early payout process for car loans?

In Ontario, navigating an early payout for your car loan requires careful attention to detail to ensure a smooth and financially advantageous process. Your first step should always be to request a formal, written payout statement from your lender. This critical document will itemize the exact principal balance, any accrued interest up to the specified payout date, and a per diem amount, allowing you to calculate the precise sum required for full settlement. Under Ontario's Consumer Protection Act, 2002, significant prepayment penalties are generally prohibited for fixed-rate consumer car loans, though it is always prudent to review your original loan agreement for any specific terms, particularly for variable-rate or non-standard financing. Confirming the absence of such fees directly with your lender is essential to avoid unexpected costs. Upon full payment, the lender is legally obligated to discharge their lien on your vehicle, meaning they will notify the Ministry of Transportation (MTO) that their security interest has been removed. It is prudent to follow up and obtain written confirmation of this lien discharge for your records, ensuring you hold clear title and can freely sell or trade in your vehicle without encumbrance, thus avoiding future complications. In the current 2025 market, with potentially elevated interest rates, an early payout can significantly reduce your overall interest costs, making this a financially strategic move that provides both savings and peace of mind.