Loan Payoff

Nearly 70% of consumers purchase their vehicle with financing. Next to a mortgage or rent, auto installments make up the second largest portion of a person’s budget. When your car payment is such a significant part of your budget each month, paying off early can seem impossible but it doesn't have to be. Here are some (hopefully painless) ideas on how to pay off your loan early. We hear from customers all the time who get their loan with the intention of paying off early. By having a lower payment amount, customers have the flexibility to pay their loan down early but still have the ability to pay the lower amount when the extra cash is needed elsewhere. Here are a few ideas on how to pay off your loan early.

 

Round Up Your Payment

Take an auto loan for $10,000.00 for 60 months at 12% interest for example. The monthly payment would be $222.44 per month. By simply rounding up the payment to $250.00 and paying an additional $27.56 each month, you can shorten your loan by 8 months and save $519.00. Setting up an auto payment through your bank can help with sticking to it, and even take some of the sting away from writing the check each month. Many consumers find it easier to have the money drafted from their bank, and banks are now offering discounts and benefits for consumers who agree to set up some form of auto payment.


Make Bi-Weekly Payments

This may not seem like it will have an effect, but think about it. There are 12 months in the year, and 52 weeks. If you make half the monthly payment every two weeks on that same $10,000 loan, you will actually make 13 full payments or one extra payment per year. Over the course of the loan you will not only save $438.32 in interest, but you will also drop almost 7 full payments off the loan.


End with a Lump Sum

By making a one time, lump sum payment at the end of the loan, you can cut 12 months off your loan and save over $1,000 in interest.


Make an Extra Payment

Find a time during the year where you will have extra money. Hello tax season! Making a single extra payment each year will save you over $400.00 in interest and have you paid off in 53 instead of 60 months.


Ching! Ching!

Everyone should have a change jar.  On average families that have a change jar can accumulate over $500.00 per year in change. Putting just one year’s worth of change toward your loan will save you $394.00 in interest and 4 months of payments.


Any additional money you can pay towards your loan will save you money. Trying to come up with extra money in an already tight budget can be difficult but if you can try to find ways of squeaking out a couple extra bucks here and there and putting it toward your loan you can end up saving a significant amount of money. If you can find a way, the benefits are great. If you have your own method and want to see how much you can save, Bankrate has a great early payoff calculator you can use. We can help you figure out the best loan for you! Our salesmen have been financing vehicles for all credit types for over twenty years and we will find you an auto loan to best fit your situation. Visit our website and fill out an online credit application. One of our salesmen will call you. We have a huge inventory of vehicles and can get anyone approved!