Nobody likes debt. Sometimes it is a necessary avenue one must take to have freedom in your lifestyle. Securing a loan is done with the best of intentions, but changes in circumstances can be unforeseen and your schedule for repayments can be affected. Additionally, paying off the loan quickly is idealistic but the concept of how to do it can be overwhelming. Doing some sums with a car loan calculator may be a good thing to do.
Responsible credit lenders use car loan calculators to assess borrowers ability to repay a loan and to determine how much money you can afford to borrow as well as how much you can manage to repay. Getting ahead with your payments on a loan is possible, the first step is to begin researching ways to pay off your loan faster. Car loans can be the biggest issue for debtors as they tend to have higher interest rates and more finite payment requirements.
Here are 5 ways to pay off your car loan faster:
1: Extra Repayments
Use a car loan calculator to see if paying additional money towards the loan will continue to depreciate the total loan amount. Extra repayments will help to pay off both the capital and the principle amounts. This supplementary money will not only decrease the outstanding loan amount, but the interest you are paying on the loan as well. A car loan calculator can be found on the Aussie Loans front page.
2: Use a broker to find lower interest rates
A broker is an independent financial entity with a car loan calculator that has access to a variety of loans, lenders and conditions. They are able to professionally assess your situation and offer you a loan that suits your needs. Consulting a broker will ultimately lead to a lower interest rate and a change in the loan repayment amount. This change will reflect a decrease in the amount of interest you pay and reflect a higher repayment of principle.
3: Make minimum repayments increase
Minimum repayments are established to ensure that you pay off your loan and the associated costs like interest in the set amount of time. These repayments are also based on your financial situation. Increasing your repayment by reassessing your spending habits will go a long way to decreasing the life of your loan. Even attributing as little as $10 extra will improve the amount of principle you pay and reduce your interest.
4: Use lump sum payments from life windfalls
Sometimes we may be lucky enough to be awarded bonus amounts of money due to unforeseen circumstances or good luck. These are times when rationality can be overshadowed by whims of fancy. The obvious outcome of putting unexpected money onto your loan is a way to pay off your loan more quickly, but it also a way to gain money. By paying your loan in advance you are paying more off the capital than interest and it will downsize your overall loan dramatically.
5: Sound selection for selling
If you decide to sell your car before the loan term ends you may want to consider your car selection. Educate yourself about cars that hold their value. Financial circumstance can quickly change with redundancy or illness and you must be prepared. Securing a vehicle that will give you optimum resale value can give you the ability to pay off the outstanding amount without reaching into your own pocket, if you sell before the loan ends.