If you are a resident of Webster, New York, you should know by now that there are numerous dealers from where you could purchase your car, such as Vision. With this wide array of options, not only do you have more vehicles to choose from, but you are also presented with so much more possibilities when it comes to financing options. One of these is taking out a car loan. If you are headed towards this direction, here are ways for you to pay off this car loan faster:
1. Put in some extra cash in your monthly payment
Say, for example, you have to pay 500 USD a month for your car’s monthly amortizations, inclusive of interest. If you earn any extra money in a particular month, instead of spending this for your wants, it might be better off for you to focus on paying for your car loan first. You can divide that extra money equally between your savings and the additional payment to your credit. If you do this for every time that you earn extra or have a raise, then you are giving yourself the chance to pay off your car loan faster.
2. Make bi-weekly (instead of monthly) payments
Financial experts suggest that one of the tricks for you to pay off your loan faster is through making bi-weekly payments to the bank instead of doing so monthly. The advantage is this: when you pay twice in a month, you will be paying for less interest because the payment is immediately applied more often. Imagine all that extra money saved, and time cut short, with merely having to pay less interest.
3. Always round up your payments
Let’s say your initial contract states that you will have to pay 375 USD every month to pay for your car. Instead of paying the exact 375 USD, round it up instead to 400 USD. In this manner, you will be paying for an extra 25 USD a month, which can quickly add up. If you follow the computation, at the end of the year, you will have already cut your necessary payments from twelve months to just eleven months because of that tiny round up increase that you allowed yourself to do every single month.
This little increase in payments does matter, and the great thing about it is that it doesn’t hurt your budget as much. Instead of spending 25 US dollars for a pair of jeans, why not use the money for now to round up your monthly car loan payments? Even a simple change like that can help your budget a lot, especially since car loans are one of the top factors killing your budget.
4. Create a way to earn extra money once every six months
You may not be aware of it, but, yes, there is always that opportunity to learn a little more income on the side. This income can even be earned with little to no effort or capital at all. For example, once every six months, you might want to clear your house of clutter, particularly your closet. Sell your clothes or any paraphernalia in your home that may no longer be useful to you online or at a garage sale. Use the proceeds of this sale to add up to the payment of your car loan. As easy as 1-2-3, you have given yourself not only the chance to earn more, but to also pay off your debt faster.
5. Never be tempted to skip payments
When you apply for a car loan, banks and lenders allow you a grace period of one to two months every year wherein you can skip payments. This offer is for you to use voluntarily should there come a time when your budget or finances may be tight, or there may have been an emergency.
As tempted as you might be to use this grace period to your advantage, however, here’s an early warning for you not to do it. Skipping off any loan payment can only give you temporary relief, but you are merely delaying the inevitable by not paying it off at the right time.
6. Endeavor to make one extra payment every year
Especially during the early years of your car loan, one very effective strategy for you to follow is to make at least one extra payment every year. Make changes in your lifestyle, and use the savings from these lifestyle changes for you to accumulate the total amount that you need to make one extra payment.
For example, if you are paying 300 USD every month for your car loan, make a personal goal for you to save 300 USD each year for your extra payment. These savings can come from little changes, such as eating out less often and packing your coffee, snacks, and lunches to work instead.
Taking out a car loan for the purchase of your automobile doesn’t always have to be a bad thing or one that you will dread doing. You do not necessarily have to stay trapped in debt for your car as long as you apply smart strategies that will help you pay off your loan faster. Now that you have this list of pointers to help you out, you can manage your finances better and pay off that car loan soon enough.