How to trim a few months off a long auto loan [Video]
Posted on Friday, June 19, 2015 at 1:19:19 PM
These days people are taking out longer car loans than ever before, with terms that last between 6 and 7 years - accounting for 30 percent of all new vehicles financed.
In fact, the popularity of long-term auto loans is unprecedented, Experian found. People are springing for auto financing terms that stretch beyond 60 months, in many cases well beyond. With auto loans running past the half-decade mark regularly, some consumers may be wondering how they can take advantage of the low monthly payments of a lengthier financing while simultaneously using smart budgeting to trim a few months of their loans.
One way to cut a few months off a long-term loan is to make payments every two weeks, rather than monthly, according to Payoff Loan, a service that helps consumers consolidate debt. This will help you shorten your loan by fitting 13 payments into a year rather than the usual 12. If you have a 60-month loan, using this method could cut it down to 54 months.
Another way to shorten your loan is to never skip a payment. Skipping a payment will keep your loan long and bump up the interest you'll owe, Payoff Loan noted.
The loan consolidation service also suggested refinancing - that is, if this option makes sense. If you can lower monthly payments or shorten your loan, refinancing could prove immensely helpful.