If you have the extra money, you may want to consider paying off your car loan faster. But, how do you do this? You can decide if one of these four tips can work for you.
4 Tips to Help Pay Your Car Loan Faster
It’s all about money here. The first thing you need to do is calculate how much extra you can afford. You can use your budget to estimate how much additional money you can apply to your loan each month. Any amount can help, and you generally have four options:
- Make bi-weekly payments – One way to pay off your car loan faster is by making a half payment every two weeks. This way, you end up making 13 full payments a year instead of 12, decreasing the amount of interest that accumulates over time, and paying off your auto loan earlier. Because this involves making more payments, not everyone has the money to do this, so make sure you take a close look at your budget beforehand.
- Payment splitting – You can split your monthly payment in two, paying half early in the month and the other half on or by the due date. This reduces the amount of interest charges, which means you pay less overall and pay off your loan faster.
- Round up your payments – Consider rounding up your monthly payment amount. If your monthly payment is $280, rounding up to $300 every month allows you to pay off your loan more quickly and save on interest charges.
- Add more money when you can – If you can’t round up each month, any extra amount at any time helps. If you have some extra cash, consider adding it to a monthly payment. Even if it’s only $15 every few months, you’re still ahead in paying off your car loan.
Does Paying off a Car Loan Early Hurt Your Credit?
Paying off an auto loan early won’t hurt your credit score, it actually helps you in a number of ways. It not only shows up on your credit reports as “paid as agreed ” (lenders like to see that you’re responsible and can manage a large purchase over a longer period of time), it reduces your overall interest expenses and amounts owed, which is an important factor that makes up your credit score. Ultimately, it’s up to you if you want to pay off your car loan early. Just make sure you’re able to handle extra payments.
Ready to Buy a Car?
If you’ve been saving for awhile and you’re ready to finance a car, let Auto Credit Express help you get started. Our free and easy service can point you toward a local special finance dealership with the lending resources available to assist people in challenging credit situations. Fill out our no-obligation online auto loan request form to start the process right now.