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How do I pay less interest on a car loan?
What can I do to pay less interest on my car loan? My interest rate is on the higher side and I’m worried about how much I’ll have to pay off.
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It’s wise to look into ways to save money! There are two ways to save on interest: pay your loan off early or refinance.
When you pay your car loan off early, watch out for
prepayment penalties
. If you don’t have any fees, then try these strategies to help you pay off your loan early:- Pay half your monthly payment every two weeks. That way, you’ll pay your loan off more quickly than you would by sticking to a monthly payment schedule, which can be more irregular.
- Make at least one extra large payment per year.
- Round up. Every time you make a payment, round the amount owed up to the nearest 10 dollars, or even the nearest 50 dollars. That way, you’ll slowly pay off more and more of the principal on your loan.
- Don’t skip payments. Even if your lender gives you the option to skip payments on your loan, don’t do it. Skipping payments means taking longer to repay the loan.
Refinancing your loan is another option to get a lower interest rate. This is a good option if your credit or overall financial situation has improved since you originally took out the loan, as you may be eligible for better rates and terms on your loan.
When you consider refinancing, be sure to shop with several lenders to help you find the best rate.
Jerry
is a great resource for comparing loan options from multiple lenders. Use our refinance calculator and avoid the hassle of searching for lenders yourself. Jerry makes it easy by finding the best lenders at the best rates. On average, car owners pay $85 less every month by refinancing their auto loan.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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