If you have an auto loan, you’ll know how much the monthly payments can cut into your budget, which is why it’s a good idea to repay your car loan as soon as you can. We know repaying any debt is hard, but here are a few things you can do to repay your loan fast.
Make Payments Every Two Weeks
Instead of making one lump sum payment every month, consider splitting your monthly payment into two and paying your lender once every two weeks. When you do this, you’re still making the same payment but by the end of the year, you’ll find that you’ve made two additional payments. That’s because most months have more than 4 weeks. So, by paying every two weeks, you can shave at least a few months off your loan term.
Round Up Your Payments
Say your payment is coming up to $278, why not round it up and pay $300. This marginally increased payment will not really burn a hole in your wallet, but it will help you pay off your loan faster.
Refinance to a Lower-Interest Loan
If your credit score wasn’t the best when you got your car loan, it’s quite likely you are paying a higher interest rate than average. In such a case, it’s a good idea to refinance to a new loan – make sure the interest rate of the new loan is lower. Even if the rate is only 1 point lower, you’ll end up saving a lot of money over the course of the loan term. So, if you find that you are paying high interest, do a little research and start shopping for a new loan. Get a few loan offers from different lenders and opt for a loan with the lowest rate of interest.
Put Any Additional Money You Get towards Your Auto Loan
If you get your tax refund, a bonus at work, or a little extra money in certain months, make sure to put that money towards your auto loan. This definitely takes a lot of self-control, but every dollar you put towards your loan will help you repay your loan a little earlier.
