A car loan helps you get the car you want sooner. For some, this is the only way to get the vehicle they need for their work or personal use.
Auto loans can take years to pay off, but the faster you can pay off, the more you’ll save.
Always check first if you are able to make prepayments or pay off the car loan in full before the loan period ends, as some loans may incur additional charges for this.
Here are some easy ways to pay off a car loan sooner.
Make sure you don’t miss any refunds
Try not to miss any car loan repayments. This can result in additional fees or lengthen the term of your loan, which adds more interest.
If you are falling behind on your payments, it can be much more difficult to catch up or get ahead with your repayments.
Before you apply for your loan, make sure you understand the repayment amounts and that you can afford them with confidence and comfort. A car loan calculator can help you get an idea of ââwhat your repayments will be, which can help you understand how much to budget for your car loan repayments.
If you need to set up a budget to pay off your loan, make sure you can stick to it. You don’t want to have a hard time paying off because it will only stress you out and maybe end up costing you more if you can’t afford your car loan.
Round up reimbursements
Your repayment amounts are calculated based on the loan total, loan term, interest, and whether the repayments are weekly, bi-monthly, or monthly. Instead of just paying the recommended amount with each repayment, round them up to help pay off the loan faster.
You can round it off to whatever amount is convenient for you, whether it’s the nearest $ 10 or the nearest $ 100. Round up your repayments to what you can afford and this will help you pay off your car loan faster and save on interest. Talk to your 360 finance specialist to make sure the lender you’re applying to allows additional repayments without incurring any fees.
Make an extra large payment once a year
If you end up with extra cash or just been able to budget well, you may want to make an extra payment for your loan.
This can be done at any time of the year and can help you save interest on the loan amount. Putting extra money on your loan can also help protect you in the event that you miss a future payment (but don’t use it as an excuse to skip a payment).
If you have great credit and a solid income, you may want to consider a lump sum payment. This allows you to reduce the fixed payment amount and make a larger payment at the end of the loan term.
If you can’t pay more, consider paying more often. By making payments fortnightly, rather than monthly, you end up making an extra month of payment, due to the number of weeks in a year.
Be sure to first check if you are able to make additional payments on your car loan, as some loans may not allow this.
Refinance your loan
If you are in a good financial situation or if you have made good progress on your loan repayment, you may want to consider refinancing your car loan.
Refinancing your auto loan means switching your current loan from one lender to another, which will give you a better deal with lower rates. You may be able to get a plan with better interest rates to lower the overall cost of your loan.
Before you refinance your loan, be sure to check your current interest rate and the length of your loan. It will generally only be worthwhile to refinance your auto loan if it is for a lower rate and for a shorter duration. If it’s a lower rate but for a longer term, you may have to pay more interest than with your current car loan. If you can switch to a shorter loan period, making sure that you are still able to make payments, it can help you save more money.
Find a car loan with minimal fees and flexible repayment options to keep costs down. A low fixed interest rate ensures that you won’t be likely to increase the interest on your loan.
Refinancing a car loan can get you better interest rates, lower monthly payments, or a shorter loan term, but make sure there are no additional fees.
If you need help with your car loan, or for anything related to vehicle financing, from caravan insurance to novation lease, contact our 360 Finance specialists.