What’s Next: Paying Off Your Car Note
Congratulations on your new vehicle! Now that you’ve gotten past the first few hurdles of applying and getting a car loan, and purchasing a vehicle, it’s now time to think about what comes next: paying off that car note. As exciting as that may sound, it’s important to start making plans on how to eliminate any payments you owe toward a car note early, before it gets hard (and too expensive) to keep up with. Here are a few tips on how to pay off a car loan as quickly and efficiently as possible:
- Don’t Skip Payments: This is the overall Golden Rule, for any type of payment or bill you might owe. Not only will you fall behind in payments, you’ll also take a negative hit on your credit score, which will make it more difficult for you to apply to any other credit-dependent endeavors. You’ll also increase how long it will eventually take to pay off the loan, and the interest you’ll end up paying at the same time.
- Make Early Payments: If you have a car loan payment due at the end of the month, start paying at least half of it off towards the beginning of the month if you’re able to. It may not seem like you’re making a difference, but over time you’ll start to see that you’re saving in interest and it won’t take as long to pay off.
- Go Above and Beyond: If you have a monthly payment of $385, try rounding up and make payments of $400 instead to get rid of the loan quicker. You’ll also be saving a lot more on interest, too.
- Refinance: While the previous three tips will help you pay off your loan faster, you can even negotiate a lower monthly rate through refinancing to make it easier on your wallet. However, the loan term is typically increased if you go this route, which will end up with you paying a lot more in interest than you probably would like. If you decide to refinance, it’s best to negotiate for a shorter term and lower monthly payments.
By using these tips, you could pay off your car loan early, and be free of any additional costs, like interest, over time. Your wallet will thank you later!