It comes as a surprise to some, but the term for your car loan is just the maximum amount of time in which you have to pay it off, and those monthly payments are the minimum that you owe.
If you want, you can put some extra funds towards that loan, paying it down earlier and saving yourself hundreds (or even thousands) of dollars in interest.
It will take some strategy and a few tricks to motivate yourself to pay more sooner, but if you’ve got the cunning to take these to heart, here’s how to pay off a car loan faster and conquer that car loan debt.
Employ These Strategies
Here are the tricks of the trade that you’ll need to adopt to put yourself in a more advantageous position.
The first strategy is simply to find more money and apply it to your car loan whenever possible. Easier said than done, right? If you are savvy you can find plenty of ways to scrounge up extra cash.
You might try downsizing, selling off the things you don’t need around the house on Craigslist or eBay. Small amounts here and there tend to add up in the long-term.
You could take on a part-time job or start freelancing, just make sure it’s something flexible that doesn’t interfere with your normal activities and you can put all that extra money towards the car. Dog-walking, weekend work, and creative services are all prime choices.
You might even try starting some kind of side business that requires minimal effort and pays out regular, modest profits. You’ll have to do some research to see what kind of work will fit your skill set, but even something that only nets $100 a month will earn you an extra $1,200 every year to put towards the car.
Second, ditch the monthly payment schedule and switch to making your payments bi-weekly. It might not seem like a big deal, but going on the bi-weekly plan gains you three things.
It will reduce your accumulated interest as the frequency of payments goes up. It will allot you an extra payment each calendar year. It will cut down the total length of your loan, and hence, the total amount of money that you’ll end up paying for your vehicle.
Third, you’ll want to start rounding up your payments. If your monthly payment is $257, pay $300 instead. Over the course of a year, that equates to $516, about two extra payments on the car. Down the line, this will shorten the term of your loan.
Alternatively, you can save up your dollars throughout the year and make one big extra payment near the end. It will go a long ways towards reducing the time of your loan, and you’ve got 12 whole months to accumulate the funds you need to do it.
Fourth, you can try to take advantage of any incentives that are being offered that might give you a discount. Automatic payments and paperless billing statements will sometimes achieve this effect, and even though the discounts are sometimes slight, it all adds up in the end.
Finally, if you have good credit, you can attempt to refinance your loan to get a lower interest rate. You’ll have to strike while the iron is hot, and the opportunity doesn’t always come around, but if it does, be prepared by making sure that your credit score is in good standing.
Use Tools to Help You Plan
If you want to determine an early payoff schedule, make use of online tools. Car early payoff calculators can help you find out how much extra money you’ll need to achieve the timetable you desire.
Use all of the techniques we covered in conjunction to maximize the amount you can put towards your car, and enjoy the benefits of having that car loan paid off early.
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Article Submitted By Community Writer