So many people accept a car payment as a part of life when it does not have to be. You do not have to pay of your car for the next five years if you do not want to. Though it may take work, you can pay off your car early and save yourself thousands of dollars in interest. Just follow these steps and you can have your car paid off much faster than that five year loan you have.
Apply for Lower Interest Rate
If you are one of the unlucky borrowers who have a high interest rate on their car loan, see if you can get that interest rate lowered. By refinancing your car with another lender, you can lower your monthly payment and interest rate which will free up money to put toward your loan’s principle balance. The less you pay in interest, the more of your hard earned money will work away at your car loan and the faster you will have it paid off.
Next, you are going to want to find ways to make extra money. The only way to really pay off your car early is to apply extra money every month to the balance on the loan. So unless you have a few hundred dollars every month that you can put toward your car, then it is time to find a way to make more money. So work extra hours, get a second job, become a secret shopper or even donate plasma to get rid of that car loan faster.
Another way to pay off your car early is to find ways to cut your current expenses so that you can put more money toward your loan. You can start with little things, like going out to eat less and skipping that cup of coffee a few times a week. Then once you have found a few smaller ways to save, you may decide to work to find more. Switch to generic brands, cut down your cell phone plan or even quit smoking and apply the money you save to pay off your car early. You may be surprised quickly how the sacrifices you make can add up.
Use those Windfalls
Whenever you get a raise or other unexpected money, make sure to use it to pay off your car. You have already made sacrifices to pay off your car, so apply money that you did not expect toward paying off your loan should be easy. Remember, the more money you put down every month, the faster you will own that car debt free.
Pay Toward Principle
Now that you have all of this money to put toward your loan, be sure it goes to the right thing. Whenever you go to make a payment on your car loan, be sure you specify that the extra money goes toward principle. Many times any extra money you pay will automatically go toward the next month’s payment instead of the principle if you do not specify. Your loan company does not want you to pay off your loan early because they lose money, so be sure to stay on top of this. Remember, the lower your principle balance is, the less you will pay in interest and the faster your car will be paid off.
Now that you are working so hard to get your car paid off, do not give up. Try to think of how good it will feel not to have a car payment whenever you think of quitting. Keep going and you will be sending in that final payment before you know it.