How can I pay off my car loan sooner?

What’s the best way for me to pay off my car loan sooner? My husband and I have our first baby on the way, and I’d like to start saving for all the baby-related expenses.

Answer
Congratulations on the new baby! Paying off loans ahead of time isn’t always the best call, but if it works for your situation, here are a few tips to help you pay off your loan sooner:
  • Pay half your monthly rate every two months. If you’re consistent, you’ll end up making an extra half-payment over the year!
  • Save up for an extra payment every few months.
  • Round up your payments to the nearest $10, $50, or even $100. That way, you’ll always pay a little extra on your monthly payment.
  • Make extra principal-only payments to reduce the amount of interest you’ll need to pay.
While these tips can help you get rid of your loan as soon as possible, it won’t always be a good idea. Some loan contracts come with prepayment penalties to dissuade borrowers from paying off their loan early. Since early payments mean the lender won’t get as much interest, these penalties are intended to compensate them for the loss.
If your prepayment penalty is too high, try not to worry. There are plenty of other ways to cut back on car expenses, like saving on car insurance with Jerry.
A licensed broker, the Jerry app helps users save an average of $879 a year on car insurance. Just download the app, answer a few questions, and Jerry will help you compare personalized quotes from top providers like Progressive and Allstate for free.
Liz Jenson
Answered on Dec 14, 2021
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