5 Ways To Pay Off Your Car Loan Sooner

Getting rid of debts like car loans sooner rather than later can be a solid investment in your future for a number of reasons. It not only improves your credit history, but means more money in your bank account, so if you’re lumbering away under the cloud of debt, here are five ways to ease the burden and help pay off your car loan sooner.

car loan

Extra repayments

The key to paying off any loan sooner is to regularly make extra payments. Loans can be paid via interest only or via principal plus interest repayments. That means you are either just paying off the interest or making headway into the actual debt, so ensure you’re paying back more than just the interest-only amount to get your loan paid off sooner.

For example, if your charges are $167 per month, try to pay back $200 a month. Even a small extra repayment can make a difference over time. Also bear in mind that the more you pay off your loan, the smaller the interest, meaning paying that little bit extra can help you save money in the long term.

Check your loan to make sure you can make extra payments and, if you’re signing up to a new loan, ensure there are flexible payment options and no exit fees. Organisations like Zoom Car Loans have some great packages available.

Change the Date

It’s a small thing but something as simple as making weekly instead of fortnightly or monthly repayments can also help you reduce your debt sooner. For example, loan repayments of $100 per week add up to $5200 in a year, but $400 per month equals $4800 annually.

Lump Sums

Got a solid tax return or Christmas bonus pending? Funnel it into your loan. A decent lump sum every now and then can go a long way to paying off your car loan quickly.

Spare Change

A great way to rid yourself of a loan is to channel spare change into it. Have a look at your weekly budget and see where corners can be cut. It might be something as small as foregoing that daily barista-made coffee and opting for the office tea room instead. But that saving could be around $20 per week.

Extra cash

There are plenty of ways to pull in a little extra cash when you’re serious about a goal. From getting rid of your unused items on EBay to a little freelancing or odd jobs. Again, just a small amount per week can add up over the life of any loan.

The sooner you pay off a loan, the sooner an item is truly yours. It’s also the chance to demonstrate some great habits for your credit rating and have a little extra spare change each week. All it takes is commitment and a small amount of financial common sense.

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Planning Out Bad Credit Auto Loans

There are a lot of factors that a person borrowing money needs to plan about if the person is using the bad credit auto loans. This is one of the kinds of loans that are provided to a person who is in need of money to buy a car. As we know a car is one of the necessities in life and a person needs it to go to work. Other than this, the person may also need a car to take family members to different places. So, one of the common kinds of loans that many lenders have to provide is the auto loans.

For a person who is having a good credit, the lenders will provide the loans without any problems at all. This is because of the fact that when the money is given to a person who is having a good credit, there will be minimal risk and the individual will repay the loan. This makes the lender to be able to get back the principal amount with the interest payable for the loan. The bad credit auto loans are one of the loans that are provided to people who have a bad credit. When a person who is having a bad credit needs a loan, then he has to approach a lender who is providing the bad credit auto loans.

When the planning of the bad credit auto loans is done, there are some factors that the individual needs to consider. They are listed here.

1. High interest cost: The bad credit auto loans will command a high interest rate. This is because of the fact that the loan is a risky one for the lender. So, the rate of interest on these loans could be as high as even 30% annually. This means that the person who is borrowing money to buy the car should pay 30% of the loan amount as interest every year. This amount of money if paid as interest will need a lot of financial planning. If your income does not allow you to pay such a high amount as interest on the loan, then you will need to seek a lower rate from another lender or do something else.

2. Planning to buy a car: When you are planning to use the bad credit auto loans, you need to plan a lot on the kind of car that you are interested in buying. There are some cars that are available at a much more economical price and this will be the best buy for you, considering the interest cost. Other than the interest cost, there are instances when the lenders will not even provide the loan to you, if you are planning to buy a very expensive car.

3. Planning the repayment: If you have too many loans, then you can even think or plan to consolidate the loans. This will help you to reduce the interest rate on loans.

These are the major factors that you will have to plan for when you are planning to take out the bad credit
auto loans.

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