Delaying in paying your car loan might see you paying more than your car is worth. But why pay more when you can pay off your car loan early. Most car loans have repayment of about 60 to 72 months. That is up to six years which accumulates a lot of interest for you to pay.
To help you get over that loan faster, here are six ways to pay off your car loan early.
Most lenders only require you to make monthly payments when repaying your car loan. If you are lucky enough to find one who will allow you to make payments biweekly, then you should seal the deal and smile off. Making payments every two weeks will see you paying off 26 half payments every year. That is 13 full payments, rather than the normal 12. With this, you will shorten your loan by five months.
If you do not have the cash flow to make the biweekly payments, paying an extra loan payment each year will make you achieve the same desired result. Also, divide your monthly payment amount by 12 and add the amount to each monthly payment. This also gives you one extra payment each year making you clear your loan earlier.
Some lenders may allow you to skip payments maybe once or twice a year. Skipping these payments gives you some sense of ‘short freedom’ but extends your loan by at least one month, attracting more interest.
This is an easy and effortless way to cut off a few months of your loan repayment terms. Say you purchased your car for $20,000 and you are supposed to pay 4.25% interest for 60 months. Your monthly payments should be $371. Stretching up and paying an extra $100 each month will reduce your repayment period by 13 months.
Take into account all your monthly expenditures, there could be an avenue to saving an extra amount which can be directed to paying off your car loan. Try to cut on the unnecessary costs for the sake of your loan. For instance, you can subscribe to Netflix instead of going to the movie cinema every weekend.
This is one an unthinkable option but can help you knock out some months of your car loan repayment. In this, you basically take another new loan in order to pay off your car loan. This is however beneficial if the terms of your new loan are better than the previous one.
If you want to pay off your car loan faster, then you should consider using some of these methods to relieve you of the loan umbrella quicker.