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How do I pay off a car loan early?
I have a 72-month car loan, but I got it with the idea that I have low monthly payments and I can still pay it off early. I’m just not sure where to start. What are some tips to pay off a car loan early?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
It was a smart move to go with the low payments of a
72-month loan
to pay it off early! If you want to pay the loan off, try the following:- Make extra payments when you can
- Make a lump-sum payment every so often
- Double up on payments
For example, let’s say you have payments of $320 per month. Instead of paying that each month over six years, you could:
- Make two $320 payments each month. This will effectively keep pushing your monthly payment back a month. So if you doubled up in January, this would count as both your January and February payments.
- Make your monthly payment and then pay whatever you can ($320 or more) toward the principal. This will pay down your loan more quickly, but you’re still on the hook for the next month’s payment.
- Make lump-sum payments once a quarter.
- Round your payment up. So instead of paying $320, pay $400.
Just make sure that your lender doesn’t have any
prepayment penalties
that could offset the financial benefits of paying your car loan off early.All of these will pay off your loan remarkably fast. If you want to free up more money to put toward your car loan, take a look at your current car insurance rates and shop car insurance quotes with the Jerry app.
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Jerry
helps you find and compare quotes from over 50 top providers, including Nationwide, Allstate, and Travelers, in minutes. When you find a better rate, Jerry can help you buy your new coverage and even switch or cancel your old policy!View full answer
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