how to pay off your car loan early

28 Sep

How to Pay Off Your Car Loan Early (and Why You Should!)

How to Pay Off Your Car Loan Early (and Why You Should!)

If you’re tired of keeping up with those monthly car payments and are ready to take a chunk out of the debt you owe, it could be time to try and pay off your car loan early!

Paying off your car loan before the end of its term can help save you hundreds in accrued interest and can lower the amount of debt you have to your name.

No matter the amount of discretionary income you can devote to extra payments, you can follow the simple steps below to start paying off your car loan early.

How to Pay off Your Car Loan Early
  1. Check with your lender to make sure you can pay off your loan without penalties. Some lenders place restrictions on early or extra payments, and some even penalize for it. Read over your initial lending agreement and call your lender to make sure you won’t have to pay a fine for putting extra money toward the loan.
  2. Consider refinancing your loan if your credit score has improved since you took out the loan. Check with your credit union or other financial institution to see if you could get approved for a better interest rate and get their advice on refinancing.
  3. Make extra payments whenever possible. If you receive birthday money, get a refund check, sell items on Ebay, put that extra money toward your car loan!
  4. Round up your payments. If you your payment is $236, try rounding that up to $240 or even $250 if you can! The extra amount may seem small, but it can save you payments in the long run.
  5. Pay bi-weekly, not weekly. If your lender approves, divide your monthly payment by two and pay every other week. You’ll be paying the same amount each month, but paying more often, which can lessen the amount of interest you’re charged each month and save you hundreds over the term of the loan.
  6. Never skip a payment. Your lender may occasionally allow you to skip payments, but refrain from doing this if you can. You will only continue racking up interest without reducing the amount of the loan.
  7. Be consistent and persistent. Be confident in the small steps, because they add up over time. Be consistent in making small changes and know that being persistent over time will get you to your goal!

Have any questions about how to pay off your auto loan? Give us a call today or swing by a branch!