7 Faster Ways To Pay Off Your Car Loan

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Don’t Lengthen Your Loan Term Just So You Can Pay Less Each Month

Before we talk about how to pay off loans faster using a car loan calculator, you should first find the right car loan for you. Most of the time, people get car loans to buy cars they can’t pay cash for. The salesperson will tell you that with your RM4k salary, you can buy a brand-new Honda Civic that costs RM140k. With a 4% interest rate and a 9-year loan term, you only have to pay RM1,762 per month. This leaves you with RM2,238 for other costs.

If you don’t have a lot of other things to do, you might think it’s cheap. But if you do the math, you’ll end up paying RM190k total, which includes RM50k in interest, when you could have bought a Myvi with the 50k. Why would you pay so much interest on something that will lose value in 9 years? By the time you finish paying off your loan, the car will be worth much less than what you paid for it. So, remember that you shouldn’t always make your loan term longer just to lower your monthly payment.

Think About Refinancing Your Car Loan

If the interest rate on your car loan is high, you may get more benefits from refinancing. You could save a lot more money or cut the length of the terms. If your credit score has gone up and you can now get loans with lower interest rates and better terms, why not? But you should think about the pros and cons and talk to a loan consultant before deciding whether or not to refinance. If you’ve paid off most of your car loan, refinancing to a cheaper loan is no longer worth it.

Make A Large Yearly Payment

Making a big payment every so often can help you pay off your balance quickly. Take advantage of your tax refunds, bonuses, and raises in pay. When you get a big sum of money, put it toward paying off your car loan. Don’t waste it on things you don’t need to. You’ll be glad you didn’t.

Sell Your Vehicle

Sell your car and buy one that costs less. If you can’t pay back your car loan because it’s too much, you can always sell your car and buy one that costs less. But before you do that, you need to think about the pros and cons and figure out if it’s worth it or not.

Cars depreciate fast. If you owe more on your car than it’s worth, you can sell it and use the money to buy a cheaper, safer car. If you owe more on your car than it’s worth, it’s not a good idea to sell it and buy a cheaper one because your old car would be worth so much less and you wouldn’t have much money left to buy a new one.

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Avoid Miss Payments

Some lenders will let you skip one or even two payments a year. Try not to give in. If you don’t make a payment, your loan will take longer to pay off and cost you more in interest.

Tries To Find A Cheaper Rate For Car Insurance

If you’re happy with your current insurance company, talk to your agent about ways to lower the cost of insurance for your car. Look into all the discounts you could get and think about raising your deductibles and/or lowering your coverage. If you change these criteria, your premium will go down, but if you have an accident, you will have to pay more.

Ask two or three other insurance companies for quotes. To make it easier to compare prices, try to get quotes from each company on the same coverage.

Cut Expenses

If you stop spending money on other things for a while, you’ll have extra money that you can put toward your car payment. When you find a way to cut a fixed cost, put that amount toward your monthly car loan payment. You might have stopped paying for gym memberships, subscription boxes, or other services that cost money every month. Pay off your loan with the money you pay each month. Find out more about how to pay off your loans in the best way.