There are many tips that you can follow to pay off your car loan as soon as possible. You should never lower your payment by extending the term of your loan. This usually doubles, or triples your finance charges, dragging out the length of time that you are paying for that vehicle and not easing your financial burden in any way.
Pay more than the minimum payment due every month. If you can afford to send in an extra $50-$100 per month, it will make a big difference in how long it takes to pay off your car note. The less interest you’ll pay overall.
Make One Extra Car Payment Every Year:
By simply sending in one extra car payment each year, you can rid yourself of a substantial amount of interest charges. Even if means skipping dinners out or canceling your cable. One extra car payment per year could save you thousands of dollars.
Buy A Less Expensive Vehicle:
For some people, it’s not possible to buy a cheaper vehicle, but for others, the cost of the loan itself is even more expensive than the car. So, why not opt for something that costs less? This will also enable you to pay off your debt faster too.
Keep your old Car longer:
Sometimes people get tired of their cars. Because they become rusty or are just tired of driving them. If this is the case, trade-in your current vehicle and make another large dent in your balance. But remember, needlessly increasing the risk of having negative equity in your next vehicle purchase is not recommended either.
Don’t Pay Extra To Have Your Loan Paid Off Early:
This fee is basically an insurance policy against you defaulting on your loan. If you can afford the payments, then there’s no reason to pay someone else to take care of it for you. You’ll save money by doing it yourself and be assured that nothing bad could happen because of how hard you work every month to send in those car payments.
Buy a used vehicle:
On average, a new car depreciates about 11% each year. This means that even if you buy a brand new one-year-old car today for $10,000, assuming normal depreciation, the same type of vehicle will only be worth about 7% of what its original price was going to be in 8 years. So if you borrow $30,000 over a 60-month term for a new car, your interest charges alone will add up to about $23,000.
Don’t get an extended warranty:
This is one of the most expensive ways to buy peace of mind when it comes to taking care of your vehicle. You end up spending thousands of dollars on a policy that may or may not ever payout and usually doesn’t cover the really important stuff that goes wrong with automobiles these days. Better off just saving that money yourself instead and getting an extended warranty only for the things you can’t afford to replace out-of-pocket.
Check It’s Worth Before Buying
Make sure your car is worth more than what you bought it for – If you owe more on your vehicle than what it’s worth, you might be upside down in your loan amount which means that if something happened to the car right now, it wouldn’t even cover what you owe and you’d still be obligated to pay the difference. This could put your credit rating in jeopardy and cause a big problem if something goes wrong with the vehicle before you’re able to sell it.
Don’t Buy Extended Warranties
Although this is not always true, extended warranty protection plans usually only cover items that wear out over time such as brakes, tires, etc… Unless you plan on driving your car for 5 or 6 years without changing things like brake pads and rotors, there’s really no point in paying money upfront for an insurance policy that probably won’t help when it comes to servicing these parts in the future. You can save money by getting them yourself and pocketing whatever the warranty company would’ve charged you to purchase them for yourself later.
Don’t Pay Someone Else To Take Care of Your Loan
When you finance a car, the dealership usually offers to set things up. So, that they can “assist” in taking care of your payments if you don’t want to hand-write checks every month. When you do this, you actually end up wasting money in the long run. Because they charge much more than what it would cost you just to stick with writing out paper checks each month and depositing them into an account at your bank. This same idea applies when buying auto insurance as well. If it’s easier for you not to have to shop around each year, then fine go ahead. But, if you enjoy the work and feel like saving some money at the same time, Then go ahead and shop around on your own instead.
Buy a car with less than 20,000 miles:
Cars with low mileage are more likely to be under warranty when something goes wrong. They’re covered when something breaks down or has problems. It also means that you shouldn’t need an extended warranty in many cases. Because there’s still plenty of factory coverage left on the vehicle. You might pay more initially per month for a lower-mileage vehicle. But, ultimately you’ll save money in the long term by keeping expenses down in this area.
By taking some of these common-sense steps. You can save thousands of dollars over the course of your lifetime. Just by keeping yourself informed regarding how to shop for better deals and save money on all kinds of things related to cars.