One of the memorable things you will experience in life is driving off the lot with your new set of wheels. Your four-wheeled baby is probably one of the big-ticket purchases you have ever made and there’s good chance you have used a car loan to acquire it.
Now, before deciding to pay off your car loan quickly, you need to understand the reasoning behind it. After all, there are some compelling benefits you can enjoy in the long run. Remember, as with any other type of debt, the sooner you pay off your car loan, the better your financial situation becomes because you will have taken a huge load off your shoulders.
Moreover, not only will you save money on interest, but you will also gain a better credit standing in the process. With that in mind, here are some suggestions to help pay off your car loan faster.
1. Find out the exact amount you need to pay off your car loan. By knowing how much you need to pay for your car, it will be easier for you to determine how much you can afford to pay, plan a budget, and save up for your car repayments.
2. Pay more than what is expected of you. If you are making fixed repayments, try increasing the amount you are paying. This will help alleviate the pressure of keeping up with your car repayments because you are ahead of your loan.
There might be unforeseen events, like a medical emergency or sudden loss of employment, that can happen in your life which may cause you to fall behind your monthly bills, including your car repayments. So, it’s much better to make extra payments while you can afford to do it than fall behind your financial obligations.
3. Try making big payments over the term of your car loan. Let’s say you can afford to make one large payment at least once a year, you can easily save a lot more on interest, and the sooner your car loan gets paid off, the money you free up can be used somewhere else like paying off your other loans.
4. Use extra income to pay off your car loan. If you are earning bonuses or commissions over the course of the year, save them all to make that lump sum payment. You also have the option of taking on side jobs to earn extra income.
There are many ways you can use your free time and skills to earn extra cash. For example, if you are passionate about writing, you can become a blogger and promote other people’s product or services and earn by doing so.
Another way is to use your car as a money-making machine. You can run errands and make deliveries in your spare time, drive people to the airport, help people move or even put some advertising on your car. The possibilities to earn extra income with your vehicle are numerous.
5. Cut down on your other expenses. You can do this by simply writing your monthly spending. Look closely at the items you’ve listed then ask yourself if you can manage to get by without it.
For example, if you have magazine subscriptions or video streaming services you pay for every month, consider cutting them. Even if you think these are just small-ticket items, the few extra dollars you save here and there will amount to a lot of money once you do the math.
No matter how much extra income you earn and the additional amount you choose to add on your car payments, remember that the money you save on interest and strong credit standing you attain by paying off your debts early will benefit you and your family in the long run.