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March 20, 2016 10:05

If you’re like me who hates owing money to others, then you’ll get why it is important to pay off your loans before their tenure. But for the most part, the majority of people tend to view loans as a convenient devil, a necessary monetary expense that’s required in this fast pace life. Today, we’ll talk about ways on how to pay off your car loan faster:

  • The first step is to find out exactly, how much is yet to be paid on the loan. Most online loan disbursal statements will have a real-time display for the exact amount. Else, a call to your loan advisor/trip to the nearest loan office would be necessary.

  • Next, go back to your loan agreement and pore over the fine-print. Yes, that’s right, go through the tiny details, to dig deeper into the exact terms & conditions governing it. Some lenders tend to levy a surcharge on anyone seeking to pre-pay their loan. This is particularly true for all those who’ve picked up new cars in the past couple of years or so.

  • If there’s nothing, then great, you can move on to the next step. On the other hand, if there is such a penalty, then don’t lose hope. Try and work out just how much the penalty is amounting to. Chances are, paying the loan off will be cheaper than the penalty incurred for pre-payment.

  • Try and recollect if you’re on a fixed or a floating interest plan. If you’ve got the former, then try negotiating with the lender for you to pay off the capital. As interest is paid on the capital amount, any reduction here will result in lower interest repayment, over the life of the loan.

  • Another trick in the book of how to pay your car loan faster is by splitting it into weekly payments, instead of monthly sums. There are more weeks than months in a year & making a say, bi-monthly payment will help pay off the loan quicker. For example, a fortnightly payment schedule over a year will result in 26 payments being made, which, if made in the usual, monthly payment contract and subsequently interpolated, it would result in 24 payments (a straight, two fortnightly savings).

Lastly, if you’re got multiple loans, and have one or two of them close to the payoff date, then, rather than spending that money after the other loans are paid-off, can be used to clear the auto-debt. Trust me, you’ll join the club of folks who’re enjoying their new cars like never before by taking this approach.

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