Pay Off Car Loan Early Penalty: How to Pay Off Car Loan Faster?
Pay Off Car Loan Early Penalty: Taking a loan for buying a new car of one’s choice is very common nowadays. Everyone wants to pay off loans as early as possible to remove the tension of debt. Paying off debt, as soon as possible, will not only relieve one’s tension but will also free up the money for other things.
Hence with the following article, you can know ways to pay off car loan fast and as early as possible. Here we also discuss paying off car loan early penalty rules.
However, before finding out different ways to pay off loans early, it is always better to know whether you can pay off your loans early without paying penalties or not. Yes, you heard it right many car loans do not allow you to pay loans early or else you have to pay penalties. This may in turn affect your credit more and you will be in difficulties.
Various means of paying car loans early
Refinancing to a lower rate
If you have been able to do payments on time, you in turn have improved your credit score. Now if you want to pay off loan early, refinancing to a lower rate is a very effective means. While opting for car loan refinancing, you should know your interest rate, check lower interest rates at banks, credit unions,s or online and you should finance for short-term and low rates.
One should keep in mind that when you opt for refinancing you are not trying to pay the loan faster but by switching to lower rates you will have to pay less.
Paying loan Biweekly
This is simple. Just take your monthly car payment and divide it by two. The amount that comes, has to paid twice every two weeks. This is a nice trick in which you will pay 50 percent of the payment 26 times instead of paying 12 big payments in a year. The positive side to this trick is also paying less interest. By paying every two weeks you are not only decreasing the amount but also the interest rate is decreasing.
Paying extra on extra pay periods
Paying extra on extra pay periods is same as paying biweekly. This is simple. If you get paid every week then you bring home four paychecks every month. Between some months (four months) you will bring home five paychecks.
Similarly if you are paid biweekly then you will bring home 2 paychecks and sometimes three too for say around 3 months. These extra paychecks can be used for your extra needs. Using these paychecks will be best for paying off your car loan.
Snowball Debt Payments method
This method can be used to pay off any kind of loan. This is valid for car loans too. What you have to do is, you have to take your lowest debt and economize to take your extra money to get it paid off. Then use your money that you were taking to pay off debt and use it in another debt.
Some people also use this method with highest interest debt initially. Both ways it will help you to pay off your loan soon. But remember, not to pile up another debt to clear off your previous debt.
Using tax refunds, bonuses and pay raises
You must have understood that using your extra money to pay off your car loans will help you pay them early. Everybody like saving the extra money coming their way, but it is good to save them later and pay off your debts first. For instance, you have got pay raise. This pay raise is not in huge amount.
Using this amount for other purposes will not be worth it as it will go unnoticed. However, using this little amount, for paying off your loan every month will surely count. Your hard earn is being used at proper place. Similarly tax refunds and bonuses can be used to pay off loan early.
Working extra is a good way to earn more money and pay off your loan soon. Doing extra job will not only make you earn extra income but will also keep you busy so that you will not get time for spending money. Remember to choose you moonlighting jobs that will make you happy. This can be anything like writing, bartending and so on.
Nowadays online purchase of various items starting from fruits and vegetables to fashion bags, clothes, watches etc has become very common. People not only earn extra income through this but for few it is main source of income. You can get some cheap good stuff and sell it online with good profit margin.
Used goods in good conditions are also sold online and there are people who buy them too. Earnings from this online business can definitely help to pay off your loans early.
Many people find using coupons really irritating. But the reality fact is that they do work. Everything is going high on prices, coupons can help one buy stuff a little cheaper. Buying grocery items and other things with coupon and buying off brand can help one save money. Remember to use coupons for things you buy generally.
Be sure to use a grocery app of your store if available. Always keep an account of savings done with the help of coupon. This will encourage you to use coupons on daily basis. Do not for get to use your savings for paying your loan.
Cut down cable and television cost
You might think this to be crazy. You can also find it difficult to save money by avoiding cable, but when you calculate the amount you save every month by not opting cable you will be satisfied. There are some very good options of internet TV services like Netflix and Hulu. This can act as your substitute for cable TV. You might be paying around $200 per month for cable whereas the above mentioned services come for around $7.99 per month.
If you think these two services are not enough for you then you can also use services such as Amazon stick, Youtube, AppleTV and Chromecast. If you cannot avoid watching TV at all then subscribe for lesser channels. Always remember that entertainment through TV can be obtained later, save money first by avoiding it and pay off your loan first.
Opt for a lower car insurance rate
You may be receiving the lowest insurance rate but there are always chances of reducing your rate. If you have not compared the insurance rate for quite sometime, it is time to do that now. Meet your insurance agent and talk about strategies to lower your insurance rate. In this competitive era, many insurance companies provide insurance at real low rates. Search for such companies.
Paying off car loan is not easy. It is similar to losing weight, difficult but with will power you can achieve it. You can secure your financial future by paying off your car loans early. There is nothing as good as having a debt free life. Read more articles on rozyjos.
More Related Queries:
- How to Pay Off Car Loan Faster
- Pay Off Car Loan Early Penalty