As of August 2022, the average car payment in the United States is nearly $700 per month. When you factor in the other rising costs of living, having a car payment gets very expensive very quickly. There are things you can do to make it less expensive and even to pay it off more quickly, though.
Research Your Balance and Whether There Are Payoff Penalties
When you’re ready to pay off your new Ram, Jeep, Chrysler, Dodge for sale, the first thing you should do is determine how much you still owe and find out if there are any penalties for paying off your loan before the term is over.
Unfortunately, many lenders make it more difficult to pay off the loan early because it means they’ll get less interest from you. Ask your lender if there is a penalty for paying off your loan early and if so, how much it is. This will help you determine if it’s worth it. It’s also a good idea to make sure extra payments go toward the loan’s principal and not interest or other fees.
Consider Making Half Payments Every Two Weeks
While it might not seem like you’re paying anything differently by making half payments, the reality is that you’ll save a bit of money on interest and pay your loan more quickly if your lender allows you to pay half payments every two weeks instead of a lump sum once a month. When you pay every two weeks, you’ll make 26 half payments (13 full payments) per year. Over a 5-year loan term, that doesn’t save much on interest, but it does save you six months of time since you’ll pay the loan off in 54 months rather than 60.
Ask Your Lender About Loan Refinancing
Most people know that you can refinance your mortgage when the rates drop, but not many people realize that you can do the same thing with your auto loan. When interest rates drop on auto loans, refinancing means that you’ll pay a lower monthly payment as well as pay less in interest over time. The amount you save depends on what your original interest rate was and what it will be after refinancing, but over time, it could save you hundreds of dollars.
Round Your Payment Up
Maybe you can’t afford to make double payments or don’t qualify for refinancing your loan. That doesn’t mean that you can’t still pay it off more quickly. Think about how much your monthly payment is. If it’s $549 a month, pay $600 instead. That extra $51 per month may not seem like much to you, but it adds up over time and will help you pay your loan off much faster.
Start Saving Money on Your Car Payments
There are many ways you can manage your car payments and potentially save in the long run. By keeping these tricks in mind, you make it more likely that you can save money on interest and pay your loan off more quickly. The result is a debt-free car that is 100% owned by you.