Many people may wonder how to pay off their car loan fast? When you take on a long term liability like a loan, it is important to pay it off as quickly as possible. It always is beneficial to pay it off in the time frame stated originally, however if you can pay it off early, you can save yourself interest fees and get out of that debt quicker. Here are some tips on how to pay off your car debt loan quickly.
- The easiest way to pay off your car loan in a quick manner is to pay more than the minimum or required monthly payment. If your monthly payment is $200 a month, and you pay $300 a month instead, you will pay off your loan 50% quicker. Sometimes you may not be able pay an extra $100 in a month, but paying more than the minimum will help you pay your car loan quicker. This is the best way to pay off a car loan the fastest.
- Coupled with that, you can also make extra payments in a month. Instead of sending in one payment, send two or three. It doesn't mean that you can then not pay for a month or two, but if you have 12 months left on your loan and you pay off two extra months, then you will pay off your loan two months sooner. You will still have to pay the 10 monthly payments each month, but now you only have 10 instead of 12.
- If you have any investments, CD's or a savings account, you may be able to take out of that account without penalty. Depending on your account status, you can have no penalty and withdraw from the account. You can use that money to put towards the loan, which will allow you to pay it off quicker.
- Using the same type of concept, you can borrow off of your life insurance to get some quick cash. Again, there may be a penalty, but it could be worth it. You could take the money now, and then pay it back later. The interest rates are typically much lower on life insurance policies, so you have a longer time to pay it off.
- If you are a home owner, you can borrow against the equity in your house. For example, let's say that you have paid 100,000 toward your mortgage so far. You can borrow up to that amount and use that money to pay off your car.
- You can also borrow from your 401k or retirement plan. The interest rates are not that bad when you have to pay it back, and you can usually take up to 50% of the value of the account.
Overall, it is best to keep a budget when it comes to paying off your loan. Keeping your finances straight will help you pay your loan off on time, or even earlier. The more organized you can be, the better off you will be. Paying off your car loan, or any loan early will always save you on your interest payments.