3 Steps to Pay Off your Car Loan Faster this Summer

3 Steps to Pay Off your Car Loan Faster this Summer
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While borrowing is a common activity for most people, it is also far too frequently an action that involves going into debt – and ultimately taking on too much credit than what you can handle. This is also a major reason behind why we are always looking for effective strategies that involve trying to pay off our credit faster and more efficiently. Buying a new car can be one of the biggest purchases you make, and can add a lot of extra debt if you don’t plan ahead.

There are some typical strategies that we may implement to help us manage our debt loads. One of which may include paying off half of the monthly payment twice a month – every two weeks to be exact. Using this payment method may help reduce your interest charges as well as get your loan balance down a lot faster. Another method could be to make an extra payment once per year that is in the form of a large lump sum amount that can also help you rid yourself of that loan in less time and can go right off the principal balance. Additionally, you could also choose to round up your payments and this way you are paying off a little bit extra off each month, which can reduce the length of time it takes you to pay it off overall.

One of the many loans that can contribute to our debt is the presence of a car loan. While we may be managing to pay it down without missing payments or derailing our credit score, it may also be that we want to find a way to pay it off in a shorter period of time.

Regardless of whatever payment strategies you will use during your payment plan, most importantly you must have the necessary funds to do so. Therefore, how will you earn this extra money or be able to save more towards these additional payments?

As the summer months quickly approach, this time of year could actually work to your advantage. There are some methods of earning extra money in the summer that help you boost your income and pay off your car loan faster. If you are in the position of wanting to pay off your car loan this summer, here are three methods that may be a great option for you while the sun continues to shine.

1) Leave you Car at Home

The first method of paying off your vehicle loan that may be specific to the Canadian summer weather, is to choose to use your car less. If you live in areas that allow for you to walk or bike to various destinations, this could be an effective way for you to save some money. As you walk or bike ride during the nicer weather, you could instead be pocketing that gas money. If you can keep this up for the next 3 months or so, think about how much money you may have in your gas fund by the end of the season. Potentially, this could be a few hundred dollars and could be used to pay off your car loan quite effectively by summer’s end.

2) Have a Garage Sale

Secondly, if you are looking to earn some more money for your extra car payments, you could also decide to have a garage sale. Plenty of times there are friends and neighbours who also may want to join forces and are also looking to make some extra money of their own. By combing your neighbourhood efforts, you could reach a lot more people with the variety of items you are selling as well as your ability to expand the scope of your advertising, by publishing an ad in the paper or online. The timing of it is perfect too. With the nice weather on your side, and on the heels of your spring cleaning, you may have the need to get rid of some unused or older items that could find their second home. Once again, you can take the money you earn from these sales and pay down your car loan even more.

3) Apply More of your Disposable Income towards the Car Loan 

One final savings strategy you might try is to re-allocate an additional 20% of your disposable income towards your loan. As a part of this method you may need to re-adjust your budget and make sure you are able to meet your other payments. The last thing you want to happen is to fall behind on your other financial commitments and upset things further. With that being said, why not use the summer season as a trial-run to see how well this strategy works for you and then reassessing to determine if you were able to keep with this payment plan. Come Fall, if this did not work out in your favour, then maybe you will decide, for example to reduce the amount of disposable income you use towards your car payments – or go back to your budget and see where else you cut back to save more money.

By implementing some summer saving strategies, you could be in a better position to have that extra lump sum to pay off your loan at the end of the season. Not only does your loan balance have the potential to be much lower, you will also have saved yourself interest charges which can help you pay it off even faster. If you have a loan that ranges anywhere from 48 to 72 months for example, you can be shaving off some of this time and pay if off within a shorter time frame.

By working a little harder to save over the next few months, not only will you feel like you’ve had a very productive summer season, you will also be able to earn some extra money and enjoy your yourself at the same time.

 

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