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How do you pay a car loan off quickly?
I didn't get the best terms for my first car loan so I want to pay it off as quickly as possible. How do I pay off a car loan more quickly?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Car loans
are overwhelming in terms of constant payments and debt! Moreover, many buyers frequently and unknowingly agree to less than favorable terms. That said, you have several ways to pay off your loan quickly!Some options include:
- Pay more every month. By paying more than your monthly payment, you can save money on interest and pay your loan off faster. Even an extra $50 to $100 a month can significantly reduce your loan term. While you’ll need to check your terms and conditions, most lenders will apply any additional payments towards your principal.
- Refinance. Although you didn’t have the best terms for your first loan, you can change them with a refinancing. When yourefinance a loan), you’re essentially signing a new loan agreement. A refinancing agreement comes with its own terms and conditions, typically shortening your loan term or reducing the amount of interest you pay.
- Make a large payment every year. Consider making a large lump-sum payment once a year. Like adding more to your monthly payments, a large payment once a year will reduce your principal balance.
Finally, double-check to ensure that your current loan doesn’t have prepayment penalties. Some loans have
prepayment penalties
, meaning that the lender charges a fee for paying off your loan early.If you’re looking for ways to save money or get some extra cash for paying off your loan, look at your car insurance. By shopping around or using
Jerry
, you could save hundreds of dollars on your insurance. Jerry is an app that gathers the best rates from top insurance providers. Customers save an average of $879 a year!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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