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?

Answer
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 you refinance 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!
Emily Maracle
Answered on Oct 25, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
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