Car Loan Relief: How to Pay Off Your Loan Faster

January 27, 2012

Many people out there need car loan relief. Car loans can sometimes strangle your wallet with payment after payment. It may start to feel like you keep sending payments in, but you don't feel like you are getting closer to paying it off. You may be only paying the minimum payments and you are paying a lot of interest, but not that much principal. Here are some ways to pay off your car loan faster.

Bi-Weekly Payments

This is an interesting option when it comes to paying your loan off. You can choose a payment plan where you send half our month's payment in every two weeks. Not every month has four weeks, so in reality, you actually are sending in 13 months worth of payments in a year's span. This means you pay an extra payment per year, and therefore pay off your loan quicker. You also are reducing your interest payments in the long run, and you are saving yourself money as well as paying it off sooner.

Pay More Per Month

Just because your payment may only be $200 a month, send in more. For example, you can send $250 instead of $200 and you would pay off your loan 25% quicker than at $200 a month. You can even send in multiple payments at once, cutting down your total number of remaining monthly payments. It won't make your monthly payments lower, but it will reduce the total payments you have left, so you would pay off your loan that much quicker.

Car Relief Refinancing

Most people refinance their car payments to a longer period of time so that they have longer to pay. You can do the opposite and refinance for relief. You would be refinancing your car payments in order to increase the monthly payments. This has two advantages that help you. First, you pay off your loan much faster. Second, you also save on interest because when you refinance, they will likely lower your interest rate as a thank you for paying more per month.

Other Money Sources

If you really need relief, you can delve into some money that you may not think to touch. You can go into your 401K or other retirement plan and borrow up to 50% of that if you need to. You can also borrow equity on your home if you own a home. This method allows you to borrow as much as you need as long as you have paid your mortgage payments. You could also go into your personal savings account and pull out some money there to put towards the loan. One last option is to liquidate some of your assets. If you have land, equipment, anything of value, you could sell them for cash and put that towards your loan. Any of these ways will allow you to put more cash towards the loan and therefore paying it off early.

The best thing you can do is create a budget. That way, you can plan each month to pay off your loan on time. When you get some extra money in a certain month, you can add that to your payment. Paying off your car early will alleviate some of your debt, and save you money on potential interest charges.

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