Paying Your Car Loan Off Early
Making the final payment on a loan (such as a credit card, mortgage, or auto loan) is a feeling of incredible accomplishment. Scheduling that regular payment over months (or years) and seeing the balance grow smaller and smaller over time, then finally reaching the day when the balance is paid in full is certainly cause for celebration.
What if you could pay off your credit union auto loan faster? Aside from what you would save paying in interest, think of all the other ways you could use that extra money! Here are some tips that will help you pay off your loan faster:
Always Check for Penalties Before Pay Off
Not every lender has their customers’ best interest at heart. Check the fine print and make sure you won’t owe any fees or penalties for paying off your loan early. Robins Financial Credit Union has no pre-payment penalties on our auto loans. But if you will owe penalties to a different lender, determine if the extra amount you will have to pay is worth the hit to your wallet. One trick you can use if the penalties are too high is to pay off almost all of your loan, then make tiny payments each month until it runs out. Be sure to start saving to pay off the loan and the penalties by setting extra money aside each paycheck.
Round Up Your Payment
Rounding up your monthly payment amount is probably the easiest and cheapest way to get out of your loan early. You don't have to add a lot extra each month, but the more you add to the payment amount, the quicker the loan will get paid off. Even an extra $20 per month can make a difference. Use our Auto Loan Calculators to help you determine how much you can save by increasing your monthly payment.
Make Bi-Weekly Payments
Making bi-weekly payments on your car loan may seem like an extra hassle, but if you set up automatic payments you don’t even have to worry about remembering. You don’t have to make your full loan payment twice each month (though that would definitely get your loan paid off faster!), instead split your payment in half. If you get paid bi-weekly, create an automatic transfer for half of your auto loan payment to be deducted from your account after each paycheck.
Make One Extra Payment Per Year
Not everyone has the cash flow or pay schedule to make bi-weekly payments, and that's okay. You can still achieve the goal of paying your loan off quicker by making just one extra car payment a year. Use your tax refund, birthday money, annual bonus, or any other source of extra cash. Many times, any additional money over the minimum required payment will be applied to your principal balance, meaning that the amount of your principal will decrease by one full payment amount.
Robins Financial understands the process of buying, owning, and refinancing a car can be intimidating. We are here to make that process easier, with our friendly staff helping you every step of the way. To find out how much you could save, give us a call or stop by any of our branch locations. If you’re ready to apply for a credit union auto loan, apply online and start saving today.