So, you want to pay off your car loan sooner rather than later?
This is a common financial goal that can bring lots of good to your life if you’re able to pull it off. But before you get too excited, it’s imperative that you pin down a plan that will guide you from beginning to end.
Here are some of the basic steps you can take to pay off your car loan sooner than expected:
Pay extra on your loan every month :
This is the most efficient way to pay off your car loan sooner. By paying extra, you reduce the term. And if you pay enough extra, you can really put a dent in your repayment. Use an online calculator to better understand how extra payments will affect your loan over the long run. You may be pleasantly surprised to find that a few extra dollars goes a long way.
Refinance your loan :
Many people think long and hard about refinancing their mortgage, but they never take this into consideration with their car loan. That’s a mistake. Consider refinancing your loan if you have a higher than average interest rate and/or have the funds to make a larger payment over a shorter term. For instance, you could refinance from a 48 month loan to a 24 month loan. Yes, your payment will increase, but you’ll pay off your loan two years earlier.
Trade in your vehicle :
This isn’t an option for everyone, but it’s something you may want to consider. If your car loan is bogging you down, trading in your vehicle is one of the many ways to find financial relief. Do so with the goal of buying a more affordable car that you can pay off in a shorter period of time. This will give you the financial breathing room you’re seeking.
Do any of these strategies pique your interest?
Are you confident in your ability to carry out one of these to reach your goal of paying off your car loan sooner?
Compare the pros and cons of each option to determine where to start. Once you know the direction you’re taking, devote yourself to making the process work.
It may be a lot of work upfront, but there’s no better feeling than paying off your car loan early. This will free up cash for other things in your life, such as paying down your mortgage!