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How do you pay down the principal on a car loan?
What are some ways that I can pay down the principal on my car loan quickly? I’m trying to pay off as much as I can so that I don’t have to pay as much interest.
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Paying off your loan faster or in larger chunks can definitely help you save on interest. Typically, any extra payments you make will go towards your principal, but you’ll want to check with your lender before making any additional payments. Sometimes, you need to specify that extra payments are for your principal. If your lender allows additional payments towards your principal, try using these tricks:
- Pay half of your monthly bill every two weeks rather than paying each month. This will equal one extra payment per year.
- Round up each payment to the nearest $10, $50, or even $100.
- Make one large payment each year.
Another thing to watch out for is
prepayment penalties
. Some lenders will charge you extra fees if you pay off your loan early to cover the interest they lose by paying off your loan early. To avoid additional costs, always check your contract first.Refinancing is also a great way to save money on your car loan’s interest rate. Finding the right lender can be a huge pain that might end up costing you time and money.
Jerry
removes the hassle by giving you one app that instantly connects you with top companies to meet your financial needs. Make sure you’re not overpaying for your car loan by comparing offers from multiple lenders to find the best option for you.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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