Congratulations on being smart enough to finance a car—the single most important purchase you will probably ever make.
But now, the question is, how do you pay off that loan faster? Here are some quick tips for paying down your car loan more quickly.
Make Biweekly Payments
The biweekly payment method is a great way to pay off your car loan faster. It’s basically the same as making monthly payments, but you will pay half of what you owe every 2 weeks instead of once per month.
For example, if you pay $300 monthly on your car loan, you must send $150 every two weeks. This will keep the lender from accruing interest and help you get rid of your debt faster.
Remove Unnecessary Add-Ons
When you take out a car loan, several things can be added to your monthly payment. For example, many lenders will offer credit insurance and gap coverage as part of their packages.
What if you don’t plan on keeping the car for very long and have no intention of refinancing or selling it at a profit, which means there’s no chance of being upside down? Then these add-ons aren’t necessary and should be removed from your loan agreement immediately.
Consider a Shorter Loan Term
When paying off a car loan, it’s important to consider the length of your car loan Calgary. The shorter the term, the less interest you will pay over time, and that’s money that can go toward paying off your balance faster.
Longer loans are better suited for people who plan on keeping their cars for several years or longer. If this isn’t your situation and you want to get rid of debt as soon as possible, consider taking out a shorter-term loan (such as three years) instead of something longer, like seven or ten years.
Round Your Payments to the Nearest Hundred
When you make your car loan payments, round them to the nearest hundred. This will help add up to savings over time, especially if you are paying off multiple loans simultaneously. For example:
- If your monthly payment is $350, pay $400 instead
- If your monthly payment is $480, pay $500 instead
You will be surprised at how quickly those extra dollars add up and how much difference this can make in how fast you pay off your car loan.
Refinance With a New Lender
Another way to pay off a car loan faster is by refinancing with a new car dealerships low credit. Refinancing gives you a lower interest rate, meaning you will pay less monthly.
This can help reduce the time it takes for your loan to be paid off because you will pay less each month and therefore have more money available at the end of every year (or whatever timeframe).
Additionally, refinancing may allow you to lower your monthly payments without getting another vehicle with higher monthly payments, which would also mean higher insurance premiums. If this happens, then it can save time as well.
Knowing how much you owe is important if you want to pay off your car loan faster. Don’t forget about interest rates and other fees that can affect how long it takes for your balance to go down.
Keep track of these factors so there won’t be surprises when you are ready to pay off your car loan completely.
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