A loan is a long drawn burden. However, to meet major expenses, you can’t help taking loans. All this makes it important to know how to cut down on the overall loan costs. This can help one save money and also get the loan off their back as soon as possible. Like any other loan, it is easy to cut down on your car loan too. This calls for a little bit of discretion.
Here are the few tips to pay off car loan faster,
Improve Your Credit
The loan you seek depends heavily on your credit score. With a perfect credit, you command a low interest rate. If not, you are left at their mercy. So, before you seek a loan, ensure that your score is on the positive side. If this calls for some waiting, then so be it. Work towards refurbishing your credit history. With a small fall in interest rates you get to save a lot over the life of your loan.
Don’t Borrow Little
It’s not advisable to go for a loan, If your need is just a few thousand dollars. Though small loans can be cleared-off soon, they invite huge interest rates. Instead, seek other arrangements. .
Like homes, it is also possible to refinance cars. This brings down monthly payments and you are in a better position to pay off your car sooner. And it is always wise to clear car loans quickly, because cars depreciate a bit too fast.
Let’s take this example. With a bad credit score, you manage to get a 60 month loan for $ 15,000 at a 20 per cent interest rate. This would cause you to shell out $350 extra each month towards interest. So, you end up paying about $7000 in interest over the loan period. A refinance can bring down your interest rate to as less as six percent. The difference can save you at least $5000 with ease.
Shop for your Car and Loan
Shopping for the right loan can save you lot of money, just as shopping for the right dealer can. Keep away from middlemen because, they are there to take their bite of money. More often than not this runs to a few thousand dollars
What about leasing a car? If you are car freak and are averse to undertaking repair costs, leasing may be the best option. With leasing you don’t have to incur the full cost of depreciation as well.
Given that cars depreciate fast, going for a pre-owned one can be a wise move. It comes at a lesser cost and spares you other related headaches.
If you do not rush through the process of buying a car, you can save lots of money.