Having a large car payment can make it hard to pay the bills. And if you have payment terms lasting five or more years, it’s beneficial to pay it off sooner rather than later.
Imagine what you could do with a few hundred extra dollars each month. You could save for retirement, purchase a house instead of renting, enjoy a vacation, or any number of things that seem impossible at the moment.
Here are a few practical and simple tips for paying off your car loan faster and more efficiently:
1. Rent Your Car Out on Turo
Don’t have the time it takes to be an Uber driver? There are some other ways to make money with your car. One option is to rent it out.
Coupon Ninja, a leading site for discounts and deals, is fond of using Turo. “If you’ve got a relatively nice car but don’t drive it every day, you can make some money by renting it out through Turo. Listing is free, you can set the minimum daily price, and you can turn down any prospective renters.” Not bad, eh?
2. Make Bi-Weekly Payments
Not quite comfortable with someone else driving your car? Don’t worry – you don’t have to relinquish control just to pay off your loan. There are plenty of other options. One method includes splitting your payment in half and making bi-weekly payments, as opposed to monthly payments.
This may seem like the same thing – and it is to your bank account – but it actually ends up benefiting you in the long run. By making a payment every two weeks, you end up making 26 half-payments annually. That’s 13 full payments (one more than the 12 you’d usually pay).
If you have a five-year, $10,000 loan, you’ll only save $30-$40 in interest. However, the real benefit is that you end up paying off the loan six months sooner. This is considerably quicker and lets you regain your financial freedom much sooner.
3. Round Up Payments
Another option is to simply round up your payments each month. For example, let’s say your monthly payment is $264 per month. If you were to pay $300 instead, that would equal an extra $432 per year – more than one extra payment. This will also allow you to shorten the length of your loan by a few months.
4. Wrap your Car With Advertising
If you’re one of those people who could care less what others think about them, then you can earn some money by turning your car into an advertisement.
“If you don’t mind your car being a moving billboard, then sign up with MyFreeCar.com, which will ‘wrap’ your car with advertising,” Bankrate.com explains. “You’ll get paid while you are doing your regular driving.”
5. Sell or Refinance
Finally, there’s always the option to sell or refinance. If you feel like you can take on a bigger loan payment in return for paying off the loan quicker, then don’t hesitate to contact the lender. They may or may not take you up on this offer, but it’s worth checking out.
If you aren’t attached to your vehicle and don’t mind trading in for something a bit cheaper, you may be able to lower your loan payment and then pay it off a few months, or years, sooner.
Enjoy the Freedom of No Car Payments
Car payments are a drag. Not only do they hurt your monthly cash flow, but they also cost thousands of extra dollars in interest over the course of your ownership. With that being said, it’s important that you actively identify the best ways to pay off your loan. Your wallet will thank you in the long run.
Which techniques will you try?