Most of us would love to be debt free but it isn’t always possible. But what if it was? What if there were ways you could pay easily pay off a car loan early?
That’s exactly what this blog post is about. Our Lincoln auto loan team offers some actionable advice that could help you pay off a car loan early.
What follows are some simple steps everyone could take to knock months or years off their auto loan!
When planning to overpay, always specify to the lender that any extra payments you make comes off the principal and not the interest. This reduces the actual amount you borrowed and not the interest they add on top!
Monthly Lincoln auto loan overpayments
The easiest way to pay off an auto loan early is to overpay each month.
If you have a household budget, identify an amount you could comfortably afford each month and add it to the main monthly payment. You can specify any amount you like and request the lender takes that every month.
Rounding up is a simple way to make small monthly overpayments and it technically the same as the above. We keep it separate because it’s very effective.
Let’s say your standard monthly payment is $325 per month. Depending on your situation, you could round this up to $350-$400 or even more.
Over time, you could significantly reduce the term of the loan and the total interest you’ll pay. This is a very common method of overpaying, which is why it gets its own mention.
bi-weekly auto loan payments
Most auto loans are repaid monthly. We usually suggest setting the payment date to the day after payday but it doesn’t have to be like that.
If your lender agrees, you could split your Lincoln auto loan payment into two. You could round up each one to keep it tidy and pay twice per month.
This works for those paid fortnightly, but can also make a modest difference to how much interest you pay.
Lump sum overpayment
Lump sum overpayments are another way to pay off your Lincoln auto loan early. They depend on you having a stash of cash but can offer significant interest savings.
Contact the lender, tell them you want to make a lump sum overpayment off the principal and they will tell you how to do it.
Lump sum payments are typically for larger amounts, from a few hundred dollars upward and can make a big difference to you much can save.
Pay Off A Car Loan Early In Lincoln
Most auto loans we deal with allow early repayment through a number of methods. Before you begin overpaying or saving for a lump sum payment, just check that your loan allows them.
It should be mentioned in your loan paperwork but the lender will be able to tell you.
If your loan doesn’t support early repayment, you may incur a fee if you settle early so it’s a good idea to check!
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!