Not everyone has the luxury or the finances of paying for a vehicle in cash. So, a lot of people borrow money and have a car loan. A car loan can be one of the biggest financial obligations one may have.
If you’re one of them, you probably are wanting to just get it over with, right? However, most people either have a 60 or 72 month loan, which is five to six years!
Yes, that can seem extremely burdensome, but with these five tips, we’ll help take the burden off and help you pay off that loan faster.
This may seem like a no brainer, but some insurances will let you skip one or two payments during your loan length. Don’t fall for it. Skipping payments will cause you more money due to interest, and will also lengthen your loan term. It can be difficult to get caught up again, so resist the temptation. The more payments you make, the less time you have on your loan.
Yes, it will take extra money on your part, but it adds up. If you can, round up to the nearest $50 on your payment. If your monthly payment is $210 a month, round up that payment to $250. You will significantly shorten the length of your loan and save money on interest.
Think about it, rounding up $50 a month over a 60 or 72 month period adds up quickly. However, maybe $50 is a stretch for you. Even adding up to the next $10 or $20 is making positive contributions to getting that car paid off faster.
This is basically the one-time version of rounding up every month. Let’s say at the end of every year you pay $500 towards your bill. This can save you thousands by the end of your loan period.
We recommend taking any “extra” cash you have an put it towards your loan. It’s easy to want to spend extra money on other things. However, if you’re serious about paying off your car – any extra amount of money will get you toward your goal faster.
Examples of “extra” money you can put towards your payment include: tax refunds, pay raises and bonuses.
If you’ve been paying all of your payments on time for the past couple years, chances are your credit has increased. Refinancing to a lower rate is a sure way to pay off your loan early.
If you are able to lower your rate, then you will be able to pay more than the monthly payment. However, if you do extend your car loan, increase your monthly payment amount so you can pay it off faster.
You may think you’re receiving the lowest rate available to you, but you may be able to find lower. It’s in your best interest to shop around and get quotes for cheaper car insurance. It’s important to review your policy every couple of years to make sure you’re not overspending.
Talk with your insurance agent and review all discounts available to you. We also recommend getting quotes from at least a few other companies. This is the only way you’ll know for sure if you are getting the lowest rate possible.
Paying down any debt is not for the fainthearted. It takes willpower and focus. Go over your monthly expenses and see where you can squeeze in more money for your payments. The relief you’ll get after paying down your loan early will feel amazing. By following these 5 tips, you’ll be on your way to being car debt free in no time!
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