5 Tips To Save Money On Your Auto Loan
Often times, buying a car doesn't come without an auto loan. However, when it comes to using an auto loan to pay off your vehicle, you are going to be paying more than what the car is worth because of the interest. Here are five tips to help you save when paying off your auto loan:
- Round Payments: If your car payment is $280 per month, for example, you should pay $300 instead. Rounding up like this is going to help you pay off the loan sooner, which means you are going to save money on the interest you would've spent if you were paying for the loan for a longer period of time.
- Refinance: If you're able to, you should definitely attempt to refinance your loan at some point. It's important to consider this if your credit has significantly improved since you bought the car because it often means that you are able to be approved for a lower interest rate. However, if the interest rate stays the same or even increases, but the time of the loan extends, then you should not refinance. Just because you have a lower monthly payment, you will actually be paying more for the vehicle because of the increased interest costs.
- Make Double Payments: If you have leftover money at the end of the month, consider making an additional payment on your auto loan. This is going to cut the amount of time you are paying for the loan in half if you are going to be doing this every month.
- Don't Miss Payments: It may be tempting to skip out on a payment when you've had an expensive month, especially around the holidays. However, the problem with this is that, even though your lender may allow it, it is going to add time to the period of paying off your loan, which increases the amount of interest you are going to be paying on the car.
- Make Half Payments: If you struggle to come up with the full amount you owe on the car every month, give yourself a bit of a break by paying every time you get a paycheck. This is helpful if you get paid every two weeks. You can pay half the amount you owe with the first paycheck and the other half with the next paycheck. This is going to help you avoid overspending and not leaving yourself enough money to pay the full amount you owe every month.
When you consider these five tips for saving money on your auto loan, you can be sure that you pay off your car more quickly and avoid spending too much on interest. For more information, contact local professionals like TruPartner Credit Union.