Car loans can help people get the car of their dreams when they don’t have the money, but they aren’t so great when one pays the loans for a long time. The good thing is that people don’t have to do this. The following are a few ways to pay it off faster and save money.
Paying Twice
Some lenders are quite flexible and allow debtors to pay more than once a month. If they allow it, that would be wise to do. Sure, it’s going to be harder to adjust to a new payment schedule, but it’s worth it. If a person pays every two weeks, they’ll finish up their payments much sooner. Keep in mind that the longer a person pays on loan, the longer they end up paying the interest rate.
Refinancing
Another good option is refinancing. According to Lantern by SoFi, “Refinancing a car loan could save money in the long run. Debtors will have to get this right, though, if they are going to refinance.” For one, they’ll want to make sure they can lower their monthly payments without extending the length of the loan. Debtors could also refinance to change the ending date of their payments. Obviously, the goal is to choose an ending date that’s sooner than it is.
Pay More
The other option is to pay more. Just round up the monthly payments as much as possible; maybe to the nearest $100 should be good enough. Of course, folks can make this amount lower or higher depending on what a person can do. Folks will have to talk to their lenders to make sure this is something they can do. In essence, they’ll be reducing the amount of time they’ll be paying this loan, which means they’ll save some cash.
The Large Payment
If a person can’t alter their budget to make a bigger payment, they may be able to do it over the year. Each year, save as much as possible to make one large payment. Folks will want to make it as big as their lender allows. It may not help pay back faster than some of the other methods mentioned here, but it’ll make a big difference. This will still make a difference in people’s wallets by the time the loan is done.
Don’t Skip Payments
Lenders may offer a chance to skip a payment. This sounds nice. It sounds like they are looking out for people, but that’s not the case. People should want to resist temptation. Yes, folks will enjoy more money in their pockets that month, but they’ll be extending the length of their loan. That means folks will be paying more in interest, so the lender wins.
Now, debtors have several things they can do to try to pay off their car as soon as they can. It will be hard, but it’ll be worth it because the folks that choose this path won’t have to worry about this loan for much longer.