If you have just come across extra money, you may have pondered the idea of using those funds to pay down your auto loan faster. But what is the best way to pay down your car loan faster?
We listed 4 proven ways you can save on interest expense by paying off your car loan earlier:
If you have some extra money laying around, using it to pay off your auto loan earlier is a smart decision. If your payment is $281 per month, consider rounding it up to an even $300 per month each month.
That extra $19 per month can help to greatly reduce interest expense over the life of the loan.
Another hack to pay off your auto loan faster is to make a half payment every 2 weeks. When doing this, you will actually end up making a total of 13 payments per year instead of 12.
This helps to reduce the interest expense on a loan drastically. However, this method requires the ability to have a funding source available, so it may not be possible for all consumers.
Another trick to reducing interest expense and paying down your auto loan faster is splitting payments into two parts. You pay the first half of the payment in the beginning of the month and the last payment towards the end of the month.
Even if you do not have the ability to pay extra for your auto loan, using any available funds to pay off your auto loan can help save on interest. Even with $20 extra every other month, you will be saving on interest.
Before implementing these steps, be sure to check your financing agreement with your lender. In some cases, a lender may charge a penalty for early payment of an auto loan, so its always best to check.
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