Having your car loan approved is an exciting time, almost as exciting as getting the car itself! But as time wears on the novelty of the car soon disappears and the focus of your attention is likely to change to getting rid of your car loan as soon as possible.
Many borrowers who have had the opportunity of paying off a car loan sooner will tell you that the day they make the final repayment is almost as good as the day they picked up their new car. So it is something worth striving for!
When it all boils down, paying off a car loan faster is not rocket science. We are going to look at some strategies you can use to do this but first, let’s look at some critical points about a normal car loan Title Loans Florida.
Usually, a car loan is set at a fixed rate of interest over a nominated turn, for example $30,000 over a five-year term. If the interest rate is 11% per annum, the minimum monthly repayment on this loan will be $646.35. This means that you pay a total of $8780.87 in interest over the full term of the loan. So you can certainly save yourself a lot of money by paying your loan out quicker, but there are some things to consider first.
Some lenders have early repayment penalties which mean that you could lose some of the benefits of paying out the loan sooner. For this reason it is important to choose a lender does not charge these extra fees. This small point could make a huge difference in the long run, so make sure you ask the question when you are negotiating with your lender and make sure you read the fine print of the loan contract when you receive it.
Now, let’s look at some ways you can repay the loan faster.
- As stated above, it is not rocket science and all you have to do is pay more than the minimum monthly repayment to shorten the loan considerably. For instance, using the above example if you paid an extra $100 per month you would pay the loan off in 50 months instead of 60 resulting in a saving of 10 monthly repayments, a total of $6463.50. This might give you some insight as to why some lenders charge an early repayment fee!
- One of the easiest ways to make a real dent on a car loan is to make more frequent payments. If you are required to make a repayment of $646.35 per month, why not try making half of the repayment every fortnight? By paying $323.18 every fortnight will result in you saving six months of repayments, a total of $3878.10!
Just by using one of these two simple strategies you can save yourself thousands of dollars on a car loan. The trick is to be disciplined and to always live within your budget and to make sure you have a lender who offers car loans without early exit fees.