Did you know that the average cost of a new car is around $37,000? Since most people don’t have that kind of cash lying around, many Americans have to take out loans to cover their expenses. Although car loans can help you buy your dream car, interest can hit you hard as the years go on. Do you want to learn how to pay off your car loan faster? Keep reading for 5 helpful tips.
1. Choose the Right Loan Provider
If you don’t have an auto loan yet, taking the time to shop for the right provider can save you thousands of dollars by the time your contract is up. Dicks Auto Loan Center is one of the most reliable providers for new and experienced drivers alike. If you already have a loan that you’re unhappy with, you always have the option to refinance with a better provider.
2. Study the Fine Print of Your Contract
Before you start figuring out how to pay off your car faster, you need to make sure you won’t get penalized for overpayments. Be patient and review every detail in your contract to ensure you won’t lose more money by trying to save.
3. Direct Extra Payments Toward Your Principal
As long as you won’t get fined, submitting extra payments toward your principal is the fastest way to pay off a car loan. The reason why is because loan providers make the most money from you when your principal is high and it can accrue interest. Make sure your extra payments are getting put onto your principal and not your accumulated interest.
4. Try the Snowball Method
The snowball method is a simple but effective method for getting rid of all your debt. All you have to do is focus your resources on your smallest debt until it’s paid off and not accruing more interest. Once that’s paid off, you move on to your next lowest debt. This method works because you’ll be freeing up more money that you’d usually put toward your monthly debt payments and interest that can now be redirected toward other sources of debt.
5. Take Advantage of Raises, Bonuses, and Tax Refunds
Earning extra money is exciting because it gives you an opportunity to treat yourself. Although the temptations will be high, it’s helpful to set aside any extra money you make for paying off your debt.
Some other ways you can earn more money are finding an easy side hustle and brainstorming different expenses you can cut from your bills. Telecommuting jobs like online teaching or freelancing are low-maintenance jobs that often allow you to set your own hours and get competitive pay. Cutting your cable or couponing are clever techniques you can use to lower your bills each month.
Learning How to pay Off Your Car Loan Faster
Now that you know how to pay off your car loan faster, you can work on building your savings for a bright, successful future.
Do you want more auto tips? Explore our site to find other helpful information on cars, trucks, bikes, and much more.