5 Ways to Finish Paying Off Your Car Loan Sooner

If you’re like most Canadians, a car loan is one of the largest expenses you have every month. Car loans can burden your finances, but there are ways to pay them off sooner. Here are five ways to repay your car loan faster and save money in the long run.

1. Make Extra Payments

One of the simplest and most effective ways to pay off your car loan sooner is to make extra payments. By paying more than the minimum payment each month, you can reduce the principal balance of your loan and save money on interest charges. Even if you can only afford to make a small extra monthly payment, it can make a big difference over time.

For example, let’s say you have a car loan with a balance of $20,000 and an interest rate of 5%. If you make an extra payment of $50 each month, you could save over $1,000 in interest charges and pay off the loan six months early.

2. Refinance Your Car Loan

Refinancing could be an excellent move if you have a high-interest car loan. Refinancing your car loan at a lower interest rate could save money on interest charges and reduce your monthly payment. This can help you pay off your car loan sooner.

You must file a new application with a lower interest rate to refinance your car loan. You can do this through your bank, credit union, or online lender. Remember that refinancing your car loan may involve fees, such as an application fee or a prepayment penalty.

3. Use Windfalls to Make Payments

If you receive unexpected windfalls, such as a tax refund, bonus, or inheritance, consider using the money to make extra payments on your car loan. This can help you repay your loan sooner and save on interest charges.

While it may be tempting to use windfalls to splurge on something fun, using the money to pay off debt can have long-term benefits. By paying off your car loan sooner, you’ll have more money available each month to put toward other financial goals.

4. Round Up Your Payments

Another way to be debt-free sooner is to round up your payments. For example, if your monthly payment is $350, you could round up to $400. Doing this will pay off your car loan faster and save money on interest charges.

Rounding up your payments may not seem like a big deal, but it can add up over time. For example, if you round up your payment from $350 to $400 each month, you could pay off a 60-month car loan three months early and save over $350 in interest charges.

5. Make Bi-Weekly Payments

Making bi-weekly payments can help you pay off your car loan sooner. Instead of making one monthly payment, you make half every two weeks. This means you make 26 payments per year, equivalent to 13 monthly payments.

Making bi-weekly payments will pay off your car loan faster and save money on interest fees. For instance, if you have a car mortgage with a balance of $20,000 and an interest rate of 5%, making bi-weekly payments could save you over $1,000 in interest charges and help you pay off the loan six months early.

Conclusion

Paying off your car loan sooner can be a smart move that saves you money in the long run. By making extra payments, refinancing your loan, using windfalls to make payments, rounding up your payments, and bi-weekly payments, you can pay off your car loan faster and achieve financial freedom. Consider implementing one or more of these strategies to pay off your car loan sooner and achieve your financial goals.

At 365 Loans Canada, we make getting a personal loan quick and easy. Whether you’re looking for debt consolidation, home repairs, or a major purchase such as a car loan, we have the perfect loan for you. With our competitive rates and flexible repayment plans, we make achieving your financial goals a breeze. Visit us today and experience the power of personal loans!

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