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Is it possible to make principal-only payments on a car loan?

I want to lower my principal to shorten the length of my loan. Can I make principal-only payments on a car loan?

avatar
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Yes, you can make principal-only payments on your
car loan
 if your lender allows it.
Many people choose to pay down the principal on their car loan first to build equity in their car, but you’ll have to specify that the payment is intended to only go to the principal—this can generally be done online or by phone. 
Some people also choose principal-only payments because they can:
  1. Shorten the length of the loan 
  2. Reduce the amount you pay in interest over the loan duration
But keep in mind that every lender has its own process, so not all will accept principal-only payments. 
If you can’t make principal-only payments on your car loan, you can try to pay off your auto loan faster—but make sure your lender doesn’t charge any
prepayment penalties
 before you make additional payments.
  • Schedule biweekly payments  
  • Pay slightly more than your minimum payment each month
  • Make extra lump-sum payments
MORE:
How to calculate total interest paid on a car loan
Car FinancingCar Loans
View full answer 
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