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How to Pay off Your Car Loan Early in Burford

How to Pay off Your Car Loan Early in Burford

Most of us would love to be debt free but it isn’t possible for the majority. It’s a nice dream to have and something to strive for though. It is possible however, to pay of your car loan early, which will help towards the end goal.

 

Our Burford auto loans team is going to explain some actionable ways you could pay off your car loan early. We hope you find it useful.

 

Paying off your Burford auto loan early

 

An auto loan is a significant monthly outgoing. It’s a lot of money each month over a period of several years. So, wouldn’t it be nice if you could pay it off earlier?

 

We think so!

 

Before you start, check your loan paperwork to make sure it doesn’t include any early settlement fees. Some specialist auto loans include them but they should be made clear in the contract.

 

Make sure to designate any overpayment or extra payments you make to the principal, the amount you borrowed and not the interest. Tell the lender specifically when setting up the method you’re going to use.

 

Then:

 

Round up your auto loan payment

 

Rounding up is an accounting term that helps save or overpay debts. It could be useful in paying off your car loan.

 

For example, say your car loan is $330 per month. Round it up to $400 or $450 depending on what you could afford and you will pay off the loan much faster.

 

If you get a pay raise at work, you can use this in your rounding up too. If you’re getting an extra $125 per month as a raise, live the same way you’re living now but add that extra to the loan payment.

 

You’re no worse off and you’re putting an amount that might otherwise get lost in the budget to good use.

 

Pay twice per month

 

Paying your auto loan twice per month is definitely possible as long as you arrange it with the lender beforehand. It can be useful for those paid fortnightly but can also reduce interest.

 

Make the standard payment with a little rounding up and you’re paying reduced interest for two weeks of the month, plus the cash overpayment off the principal. Sounds complicated but it works!

 

Make a lump sum payment

 

Get a large commission or cash bonus? Make a lump sum payment on your loan principal to pay it off. These would usually need to be several hundred dollars or more but can also pay down the loan.

 

Again, make sure the payment comes off the principal and you could reduce the loan significantly.

 

Refinance the auto loan

 

If you’re a couple of years into the loan and have a good credit score, you could refinance for a lower amount over a shorter term. Make sure to get a loan with low or no fees and you could either save money per month or pay the same over a much shorter term.

 

When you’re ready for a car lease or loan, get in touch with the Burford auto loan experts at Northway Ford for great deals on auto finance.

 

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Categories: Car Loan

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