Below are some of the best methods to pay off your car loan, credit cards, or any type of debt even faster as advised by .huffingtonpost.com.
- Make bi-weekly payments: Submit half the payments to your lender every two weeks instead of the regular monthly payment. This will accomplish three things:
Less interest will accumulate, because your payments will be applied more often.
You will make an extra payment, because there are 52 weeks in a year, which equals 26 yearly payments (or one extra).
Doing this for the duration of the loan could shave off several months.
Make sure to discuss this with your lender before making bi-weekly payments, because you might be penalised for any extra payments or paying off the loan balance early.
- Round up the payments: Rounding up your payments is an effortless way to pay extra without even missing the funds. Just like making bi-weekly payments, you don’t need a lot of extra funds to knock a few months off the term of your loan.
- Make one extra payment: If you don’t have the cash flow to commit to bi-weekly payments, you can achieve the same result by making one extra payment per year. Use money from a tax refund or bonus from work to help pay down your loan faster. Or you can divide your monthly payment by 12 and add this amount to all future payments.
- Refinance your loan: This is one of the easiest ways to lower your payment, save interest, and pay off your loan in half the time (if you have semi-good credit, of course). Many local banks and credit unions are offering super-low interest rates on mortgage loans and car loans. So if you have not refinanced your loan (or taken advantage of 0-percent interest), now is the the perfect time to do it.
- Take advantage of paperless: Sometimes additional discounts are offered when you sign up for auto payments and paperless statements. It saves the lender money by not having to follow up with paper billing and creates a seamless payment experience, so there are no late fees.