Fast ways to pay off a car loan
Fast ways to pay off a car loan
Car loans are a great way of getting the car that you want while paying it back in manageable repayments. Different car loans have different loan terms and these can vary between, around 1 year up to 7 years.
If you’re thinking about paying off a car loan and want to know how to pay off a car loan quickly, it’s worth considering all the options available and doing your sums to ensure you’re definitely getting the best deal for you.
Speak to Positive Lending Solutions to get the most out of your car loan agreement.
Top Tips for paying off your car loan quickly
- Consider half your monthly payments every fortnight: speak to your lender about whether this might be possible. It will mean that you’ll make 26 half payments each year which equates to 13 full payments instead of 12. Whilst this might not seem like a lot, consider that on a 60 month $10,000 loan you could be repaying the loan in 54 months instead of 60!
- Avoid skipping payments: this is really important even though it can be tempting if you’re tight for cash. Often lenders will allow you to skip 1 or 2 payments per year without it affecting your credit score, but try to think of this as simply delaying the payment and delaying the time spent paying off a car loan.
- Make a large extra payment each year: this could be timed for when you receive your annual bonus or when you have a month with less expenses to pay. You could save hundreds of dollars in using this strategy to pay off a car loan quickly. It’s important to check that you won’t be charged a fee for making this kind of payment so always check with your lender first.
- Round up repayments: imagine your monthly repayments are $217 per month. Rounding up this amount to the nearest $50 will seem like a minimal extra expense at the time but can really add up especially over a longer loan term.
- Budget carefully: this might sound simple but in reality very few people budget properly. If you’re really serious about figuring out how to pay off a car loan quickly, you should consider looking at your monthly income and working out whether you can increase this at all or make use of tax benefits. You should then consider your expenses each month and work out where you can cut down excess spending or make spending more efficient.
Refinancing your loan
In order to figure out whether you should refinance your loan, you’ll need to consider the interest rate and monthly fees that you’re currently paying.
If you’re considering how to pay off a car loan quickly, you might want to think about refinancing your loan – although remember that this will only make sense if you can negotiate both a lower monthly payment and a shorter loan term.
Refinancing a car loan to simply get a lower interest rate means that you could be facing a longer loan term which actually results in you paying back the same or even more each month.
Paying off a car loan can be helped by the right refinancing your car loan and if you do this in conjunction with our other strategies above, you’ll be on the right track.
Paying off your car loan too quickly
Did you know that it’s actually possible to pay off your car loan too quickly? This depends on your individual loan and the agreement you have with your lender.
Some car loans do have early repayment fees which mean that paying off a car loan too quickly could result in you incurring fees or charges which might make the decision financially nonsensical.
As long as you’re paying off your car loan in the correct instalments in full by the correct time agreed, your credit rating won’t be negatively affected.
Ask the experts
With decades of experience helping people to find the right car loan for them and advising them on how to pay off a car loan quickly, Positive Lending Solutions is on hand to help you.