How To Pay Off Car Debt Early
We'd all like to live without the monthly stress of car payments. Here are a few pro‐tips on how you can make this dream into a reality
- 1. Pay Half your Monthly Payment Every 2 Weeks. As small a step as it may seem, taking this initiative will eventually lead to you making 13 monthly payments per year. Just as importantly, it will help preclude the possibility of making late payments ‐ ‐mistake that can damage your credit score and lead to pile-on debt.
- 2. Round Up. Another small adjustment you can make that will pay dividends in the long run is to round up every monthly payment. According to Experian Automotive, the average monthly payment on a car loan is $493. Paying $500 is just a small sacrifice, (it may require giving up on frappuccino every two weeks), but given enough time this will save you substantial money in terms of accumulating interest.
- 3. Never Skip Payments. Some car loans give buyers the option to skip one payment per year, supposedly free of consequences. However, even though you are granted clemency in terms of penalties, you will still be paying extra interest by not paying off your car loan as quickly as possible. Moreover, you will be setting a bad precedent for yourself. Bottom line: if you have a financial emergency, then it's certainly nice to have the option to skip a payment. But if it's not a bonafide emergency, just bite the bullet and pay up. Your future self will thank you!
- 4. Refinance Your Loan. Getting a lower interest rate on an existing loan may be possible: research loan refinancing to see if this could be the right choice for you!
Struggling to make monthly car loan payments? If you're in over your head in debt, Madison Monroe and Associates may be able to help. Visit us online today to learn how!