Those currently financing a car can’t afford to miss this!
How to pay off your car loan faster, a trick that finance companies never tell you since you bought the car. Most of your monthly installments mainly go to interest. When you calculate it, you’ll see that you end up paying more than the car’s price. But don’t worry, I’ve got a tip to help you out.
How to pay off your car faster.
1. Bi-weekly Payments: Making car payments every two weeks instead of monthly can effectively double the number of payments per year from 12 to 24. Each payment would cover both principal and interest in the same amount as before. This reduces the principal faster and lowers the interest rate every two weeks. However, it’s crucial to check with the finance company first, as some may not adjust the interest rate with bi-weekly payments since interest is usually averaged monthly.
2. Pay Extra Whenever Possible: If your finance company allows it and reduces the interest each time, consider paying more than the regular installment. For instance, if your regular payment is $10,000 per month and you have extra funds one month due to a bonus or commission, paying $15,000 or $20,000 will shorten the repayment period, decrease the principal, and reduce the interest.
3. Avoid Missing Payments: Late fees and penalties contribute to additional expenses and prolong the loan term. Timely payments are crucial to maintaining a good credit score and avoiding extra charges.
4. Refinance at Lower Rates: Refinancing your car loan becomes worthwhile when you can secure a lower interest rate than your original loan. It’s advantageous when refinancing decreases the interest rate, even if it doesn’t reduce the principal. Lowering the interest rate means you pay less over time.
5. Negotiate with Your Current Lender: Negotiating with your existing lender for a lower interest rate or even extending the loan term while maintaining or increasing monthly payments can help pay off the car faster. By increasing the monthly installment, you reduce the principal amount and the interest charged over time.
Following these steps can help pay off your car loan faster, even if your finance company hasn’t recommended them since they can lead to significant savings and an earlier payoff. Additionally, regular vehicle maintenance is essential to avoid unexpected repair costs and keep the car in good condition, saving you money and time in the long run.
Thank you for the information from: www.yukonlubricants.com
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