What's the best way to pay off a car loan fast?
I want to pay my car loan off faster. Should I put money in a savings account and pay it off when I have the money, or should I just make month-to-month payments until it's paid off?
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Answered on Apr 27, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
“The interest rate will play a huge role in how you pay the car off. If you got a promotional zero-percent APR rate, then putting the extra money in savings and paying the rest of the loan off when you have the cash makes sense.
But if your interest rate is higher than your savings rate (which is highly likely), you should keep paying month to month. To accelerate this process, if you have a bit of extra cash each month, make a principal-only payment. This will lower the amount you owe, which will subsequently lower your overall interest paid into the loan.
And once you have the loan paid off, you can also save money by dropping full-coverage car insurance if you don’t need it and opting for high-limit liability insurance instead.”
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