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.
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.
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.
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.
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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