As you’re looking at the perfect new car to buy and figuring out financing, it’s a good idea to think ahead about paying off your car loan. Car loans might be a part of life, but that doesn’t mean you have to spend more years than necessary paying them off. Here are a few methods you can put to good use to become the legal owner of your car ASAP.
Make Principal Payments
Depending on your lender, you might be allowed to make principal-only payments. If so, take full advantage of it. What that does is cut down on the amount of interest being applied to the total remaining loan, and you pay your loan off faster.
Pay Your Loan Twice a Month
Another good idea is to split your monthly car loan in two, making a payment twice a month. The reason this is a good idea is that you make 13 payments a year rather than 12. Not only do you pay your loan off faster, you also save money in interest.
Round Your Payments Up
When it’s time to make your car payment, round up to the nearest $50 whenever possible. You can combine this tip with the one above, splitting your payment in two and adding an extra $25 to each.
Use Extra Cheques, Bonuses and Tax Refunds
After a while, paying your car loan can become just another monthly financial obligation to take care of. This means you might forget about it when you get an extra cheque, your tax refund or a bonus at work. When you do get some extra cash, stop for a moment in your excitement and think about how you can best use those extra funds. While making an extra car payment might not be as exciting as a new pair of jeans or home renovations, your future self will thank you.
A few tips and some strategy are all you need to pay off your car loan early. Be sure to put these suggestions to good use.