6 Payment Hacks to Pay off Your Auto Loan

Buying a car is a very big decision and investment. Since it is a large purchase, most people that buy cars end up taking out a loan to finance a purchase of it. If you have taken out an auto loan to buy your car, there are a variety of tips that you can follow that could help you to pay off the loan faster.

Put More Down 
Putting more money down is a great option. Not only will you have a lower monthly payment, but you may qualify for a lower rate. This will help you to save money each month, which could be applied to your bill.

Get a Shorter Term 
Simply getting a loan with a shorter term, such as 36 or 48 months, will allow you to save money through lower interest rates. This will also require you to pay your loan off faster.

Increase Your Payments 
When you get an auto loan, you likely will have a fixed payment for the whole term. However, increasing your payments by even a small amount could cut months off of your total repayment term. Even a five percent annual increase will go a long way.

Pay Every Other Week 
If you have a job where you get paid every other week, as opposed to twice per month, making a payment every four weeks could be a good way to pay down your loan faster. With this strategy, you will actually make 13 payments per month instead of 12. This 13th payment will go right to principal and allow you to shave up to 6 months off of your loan.

Pay On Time 
Most importantly, when you are trying to pay off your auto loan faster, you need to make sure that you pay your loan on time. One big mistake that many people make is that they do not make payments on time. This is terrible for your credit and could lead to late fees, which could make it harder to pay your loan off faster.

Refinance 
Finally, you notice that interest rates in the market have declined or if your credit score has improved, you could qualify for a lower interest rate on an auto loan. Most major lenders today do provide refinanced auto loans. You could refinance your loan into a loan with a lower interest rate, which will allow you to pay the loan off faster if you make the same payment each month.

Whenever you take out an auto loan, or any other type of loan, it would be a good idea to figure out a way to pay it off faster. This is especially true if you have a high interest rate. These six hacks could help you to pay off your loan much faster.

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