How can I avoid finance charges on my car loan?

I'm tight with money, and I don't want to pay more than I have to. Is there a way to avoid finance charges on my car loan?

Answer
We totally understand that you’re looking to save money, but let’s clear up what finance charges refer to.
Finance charges on a car loan refer to any cost from borrowing money. Finance charges can include:
  • Interest rates
  • Origination fees
  • Administrative and clerical fees
  • Prepayment penalties
  • Late fees
While some of these are unavoidable, such as an interest rate or administrative fees, you can bypass others by simply making your payments on time. If you want to save even more money, you should offer to pay the origination fees and clerical fees upfront. By paying these fees upfront, you eliminate interest payments on them.
You can also lessen the impact of interest by paying your loan off early. As long as your lender doesn’t have any prepayment penalties, you can put more money toward the car each month until you pay it off.
Since you’re looking to save money, you should consider shopping around for car insurance. Sign up with Jerry to compare quotes from up to 50 different insurers in just minutes. The average Jerry user saves $879 per month!
Eric Schad
Answered on Oct 25, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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