A Car loan which has a longer tenure, makes you pay more interest rate. Also the faster you pay any loan the lesser the burden on your finances. Before you opt to repay your loan faster, make sure that the lender does not charge any fees for prepayment and other such charges. You might calculate your EMIs using the car loan EMI calculator to get a know-how of your EMIs, based on which you will decide on the tenure. Yet it is helpful to repay your loan faster than the decided tenure. Here we give you a few tips to pay off your car loan faster.
- Pay Bi-Weekly
Instead of doing the regular monthly payments, repay the EMIs bi-weekly. Paying bi-weekly will shorten your tenure and in turn, help you save on the amount of interest which you would have to pay for a longer tenure. When you follow this routine you will also be paying one extra payment for the year. This way you can repay the loan faster.
2. Round Up the Payments
Rounding up your payments is an easy way to pay an extra amount for the loan. This helps you lessen the number of months for your payments significantly.
3. Look for Extra Money
Look out for places from where you can get some extra money. These can include selling stuff on Amazon or eBay, taking up a side job etc and using the received money for repaying the used car loan.
4. Make an Extra Payment
If making bi-weekly payments does not sound like a feasible option, then you can make one pay extra every year. That will have the same effect as bi-weekly payments. If you cannot do payment at one go, then you can divide your monthly EMI by 12 and then add this amount to all the payments for the year.
5. Consider Refinancing
You can consider refinancing your new car loan to one which has a lower interest rate. This is only possible if you have a good credit score. You should keep in mind that your aim is to repay the loan faster hence you should choose a loan with a shorter term and low-interest rate.
6. Take Advantage of Digital Features
You can choose to sign up for features like auto payments, online statements etc. This creates a flawless payment experience wherein there is no chance for a late fee.
7. Make Use Tax Refunds, Bonuses, And Pay Raises
Usually, you would want to use the amount received through tax savings, bonuses or pay raises as a saving. If you want to pay your car loan faster, then till the time you have the loan on you, you can use these extra funds to repay the loan faster. This will help you bring down your car loan balance.
It is always a smart option to repay any loan faster given that you are not charged extra for it by the lender. You reduce the tenure and save on the interest.