How to Pay Off Your Car Loan Faster
Do you have your eye on a big purchase? A house or second vehicle
perhaps? Big ticket items like these may seem out of reach if you are still making payments on your current car. If you want to free up some money, you can try the following strategies to get out from under a car loan quickly so that you can make your next big purchase.
Three Tricks to Paying Off Your Car Loan Faster
Are you trying to get rid of your debt? Here's one way kiss your car loan goodbye.
Round Up Your Payments
Say you owe $364.28 each month on a car loan. Rounding up is how to pay off your car loan faster. By simply writing a check for $400, you can whittle away at the loan quickly. You will hardly notice the extra $35.72 you send in – just the cost of a couple of pizzas and a six-pack – but every 10 months, you have made nearly an extra month’s payment. This can shave a lot of time off your loan.
Pay Twice a Month
Bi-weekly payments are another way to pay off a car loan fast. Half-payments every two weeks eat away at principal and help prevent interest from piling up. Consider again a monthly payment of $364.28; half of that is $182.14. Schedule the payments to match your own pay cycle so they coincide with your every-other-week paycheck. Two things will happen:
1. Bi-weekly payments add two payments a year (26 half-payments versus 12 full payments).
2. Interest charges diminish rapidly against the erosive power of the payments.
Refinance Your Original Loan
Many people keep paying out of habit without noticing their interest rate or other loan terms. Shop around, even if you only have a year or so remaining in your auto loan. A credit union, local bank or savings and loan may have better terms.
Some lenders offer discounts for online payments or for payments done by Automated Clearing House (ACH). Combine a few of these angles, such as a local lender eager for your business, a slight drop in interest charges for using online services and bi-weekly payments tied to your direct-deposited paycheck, and you could pay hundreds less each year on that auto loan.
Valley Chevy Dealers
When you are ready to discuss financing, search for a new Chevrolet or test-drive the Chevy Tahoe, locate your nearest Phoenix Chevy dealer. We look forward to helping you find your way into a Chevy Volt or other fine car today.