According to the Federal Reserve, the average amount of a new car loan is $26,673 and a monthly payment of $485. Here are simple strategies to pay off your car loan early.
Make Bi-Weekly Payments
By switching to a bi-weekly payment plan, you will essentially be making a payment every 2 weeks for half of the full payment you currently make once per month. With a bi-weekly payment plan, you end up making 26 half payments per year, or 13 full payments. This works out to one additional full payment a year.
Round Up the Payments
If you don’t have the cash flow to commit to bi-weekly payments every month, send in a little bit of extra money. One of the best ways to do this is to round up your payment. For example, if your payment is $400, send in $425. The more you add, the quicker you will pay off your loan.
Refinance Your Loan
This is one of the easiest ways to possibly lower your payment, save interest and pay off your loan sooner. CFCU auto loan rates are currently available as low as 2.35% APR* up to 72 months and we offer no prepayment penalty.
The bottom line is that paying off your loan early will save you money in interest and decrease the overall term of the loan. Just imagine what you could do with your extra money: save for retirement, make home improvements or pay off other debts.
* Annual percentage rate. Rates, terms and conditions vary based on credit worthiness qualifications and collateral conditions. All loans are subject to approval and are subject to change without notice. Auto Loan Payment Example: Loan amount of $20,000 with $0 down at 2.35% APR for 72 months results in equal monthly payments of $298.12.