3 Tips to Payoff an Auto Loan Quickly

If you want to payoff auto loan debt quickly, you are not alone. Many people list "paying off their car" as one of their top priorities. The flexibility that comes with not having a car payment is desirable because you can do so many things with the money that you devote to a car every month. However, paying off your car requires dedication and many are not dedicated enough to put a plan into action that will help them pay off their auto loan quickly. If you would like to pay off your loan quicker than you originally planned, here are a few tips to keep in mind. 

Add to Monthly Payment

One strategy that you could use to pay off your auto loan early is to pay a little more than required each month. Putting an extra $50 or $100 will help make a big dent to the principal balance of the loan. This will not require a huge change in your monthly spending habits as it is only a few extra dollars per month. However, it can considerably cut down on the amount of time that it takes to pay off the loan. Making a small commitment every month can make a big difference in your results. 

Make an Extra Payment

Every now and then, make an extra payment when you have the money. For example, when you get your income tax refund, just write another check for the same amount as your monthly payment and send it in. You will be surprised how fast this makes a difference. If you do it twice a year, you will have your car paid off in much less time than it normally takes. This might be much harder for you to do because it requires a bigger financial commitment from you. However, it will make a huge difference in the amount of time that it takes to pay off the loan. 

Bi-Weekly Payment                                                                              

Another strategy that you could use to pay off the loan early is to use a bi-weekly payment system. This amounts to making half of your normal monthly payment every two weeks. At first glance, it might not seem like this strategy will make a difference. However, with this strategy, it is the equivalent of making an extra payment every year. It is a lot easier to budget for this type of a plan as compared to making a single lump sum payment.

Therefore, many will find this strategy easier to implement. Your auto loan company might offer this program for you or you could set it up with your bank. If you do implement this strategy, you will want to time everything right so you are not late on your monthly payments. For example, if the payment is due on the 15th, you will want the second part of the payment to be made on the 15th. This will help you avoid late fees and any other potential problems.