10 Ways to Pay Off Your Car Loan Early
If you have a car loan, it can be difficult to always make sure you set the money aside to pay it. This can be more than annoying – it can actually damage your credit if you forget. Plus, there are so many other things you could be doing with that money! If you want to get to where you no longer have that car loan, the best thing to do is pay it off. Here are a few ideas of ways that you can pay the loan off early, allowing you to use those funds for other bills, or even just to have fun with.
Make More Payments
Typically, a car loan is due back in monthly installments. This means you make 12 payments per year. If you were to do a half-payment every two weeks instead, this would give you an extra payment at the end of each year. By making 26 payments throughout the year, it is like having a thirteenth monthly payment put on your loan.
Making Even One Extra Payment Helps
If you are not financially able to send in half-payments every two weeks, consider just putting a little aside each paycheck. Even $20 out of each paycheck adds up. When you do this, put it aside. Once you get to where you have enough to cover one extra payment, send it in. It gives you the same result as the biweekly payments, and helps cut your car loan down in the end.
Take on Side Work
If you can take on a side job once or twice per month, you can put those funds directly towards your car payment. Perhaps you can dog-sit for a friend, or help a neighbor clean out their garage for some cash. If so, then put those funds directly to your car loan. It will help cut down on what you owe, and inspire you to take on a few extra side jobs when the opportunities arise.
Round Up Your Payments
It may not do a lot depending on what your payment is, but rounding up your payments can really help. Consider your monthly car loan payment. Say, for example, it is $165. When you can, try rounding it up to an even $200. That pays off an extra $35 each time you do it, which goes directly towards the principle. Granted, if you are only able to round up a few dollars, it will not do much, but every penny you pay off early helps!
See What Discounts You Qualify For
Some loan institutions give you discounts on how you pay back your loan. Some will cut down on what your interest rate is if you opt to go with paperless billing. Others will cut down on what you owe if you sign up for automatic payments. You can ask them if you get any benefit from fees if you connect your payments to your checking account or credit card. Ask them, as there are many options that you may qualify for, but won’t know it until you ask.
Try Refinancing Your Auto Loan
If you got your auto loan with a really high interest rate, but have since made your payments on time, you might just qualify for a lower rate now. Ask around and see if any loan institution, or even the one you already use, will offer you a lower interest rate on your loan. By refinancing what is left on the loan to a lower interest rate, you will be able to save money each month just from having less interest you need to repay.
Always Make Your Payments
There are some financial institutions that give you the opportunity to skip a payment occasionally. You should avoid doing this at all costs. It adds to the length of the loan, and makes it to where you end up paying more in the long run. Always make your payments, and make them on time. That way, you can pay your loan off sooner.
Make Your Payments a Day or Two Early
One of the best ways of paying off your auto loan early is to make sure you make your payments a little early, no matter how often you make them. This avoids things like late fees, which get tacked on to the end of your loan, extending how long it will take to pay the loan off. The goal is to figure out how to repay the loan sooner. By making your payments even just a day or two early, you know you have avoided the problems that come with late payments and their associated fees.
Make Snowball Payments
When you want to pay off your auto loan early, one of the better options is to make snowball payments. What this means is you take what you have to pay off bills each month, and you apply it to the items with the lowest balance first. Once those little bills are paid off, you then use that money to go towards other bills. Each amount that can be used towards higher balances then snowballs together, making it easier to pay bills off early.
Use Bonus Funds to Pay Off Your Car Loan
Any time you get bonus funds, use those towards your car loan. Things like a work bonus or tax refund work well when it comes to helping pay down your bills. Even if you have other things you need to do with part of the funds, take some of them and apply them to your auto loan. Every bit of extra funding you put towards the vehicle allows you to have it paid off even sooner.
When you get an auto loan, it helps you afford the car you want and need right now. By paying that loan off early, you can use those funds to help pay off other bills, or even to simply save if you are so inclined. Consider some of these tips to help you pay your auto loan off sooner.