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How can I pay the principal on my car loan?

Just the other day, I won a few hundred dollars on a lottery ticket I got for my birthday. I’m waiting to claim the winnings until I find a beneficial use for the money. I’m thinking of using it to pay extra on my car loan. How can I make an extra payment toward the principal of my loan?

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Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations, it’s not every day you win a sizeable amount of money playing the lottery! And using the money for something beneficial is a great idea.
To pay the principal on your
car loan
, you can typically just increase the size of your monthly payment and the excess will go toward the principal automatically. However, policies vary by lender, and additional payments are not always accepted, so you should contact your lender before making any extra payments.
When speaking with your lender, be sure to:
  • Confirm additional payments are permitted.
  • Ensure the excess payment will go toward the principal and is not viewed as an advanced payment.
  • Ask about any
    prepayment penalties
    that could negate any benefit of paying more.
If everything checks out and you are allowed to pay down the principal, you can:
  • Make one additional sizeable payment.
  • Pay half of the monthly bill every two weeks. You will have made a single additional payment at the end of one year.
  • Round up each payment you make.
If you discover additional payments are not permitted or prepayment penalties make it impractical, you could modify or refinance the loan for terms that better meet your financial situation.
Jerry
makes refinancing a hassle-free experience by enabling you to easily compare offers. Simply answer a few questions in our app, and Jerry matches you with multiple lenders that meet your needs.
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