Having one less ongoing payment that needs to be made can make managing your budget easier and free up some cash flow. If you’re currently paying off a car and want to speed up the time it takes you to pay it off in full, there are a few methods to do so.
In this article, we provide you with what we think are the top 4 methods of minimising your car loan term. While every single one of them may not be applicable to your particular situation, there’s bound to be at least one or two that you can use!
It’s important to note that some loan packages have penalty costs involved when they’re paid off before the agreed-upon term. As such, be sure to review the terms and conditions of yours to confirm you’re not going to be charged when you bring your final repayment date forward using the following tips.
4 fantastic methods of reducing the length of your car loan
1. Pay lump sum amounts when possible
Whenever you come into a good chunk of change like a tax refund at the end of the financial year, for example, put it straight towards your loan. Paying off a car loan faster means you’re not going to pay as much interest, so putting as much as you can afford into it whenever you can actually saves you money in the long run.
2. Make more frequent payments
A car loan is often set up as a monthly payment. If your lender allows it, break this payment out to weekly or fortnightly amounts and you’ll have paid off an extra month’s worth by the end of each year.
For example, if your monthly repayments were $1000, that totals $12,000 over 12 months. But divide that by 4 to weekly repayments of $250 and over 52 weeks it’s $13,000.
3. Round up the repayment amount
Whatever your repayment amount is, if you’re able to afford to do so, increase it to a whole number (e.g. from $897 to $1000) or even just increase it by a certain amount every time. By adding just $50 each month on top of your repayment you’ll be contributing an additional $600 every year.
You always have the option of refinancing your loan to a package that offers a shorter term, although this will of course come with higher repayment amounts. Your current lender may also charge you fees for breaking the loan.
If you want to know if the loan package you’ve got has penalty fees, what refinancing options are available to you or both, Stratton Finance is here to help. Call us now on 1300 787 288 for an obligation-free chat.
Have a chat with us to learn what your options are
Whether you’re thinking about refinancing your loan or would like some more information about what opportunities your finance package offers to reduce the loan term, we’re here to help.
With well over two decades of experience helping people all over Australia with car financing, you can feel confident we’ve got the expertise to deliver the best possible outcomes every time.
Use our online car financing calculator to get an idea of what your monthly repayments would be if you refinance with us, and if you like what you see (we’re confident you will) give us a call on 1300 787 288 to discuss things further.
You can also send us an enquiry and one of our financial experts will contact you at a time convenient to you.