- Round Up Your Payment
Take an auto loan for $10,000.00 for 60 months at 12% interest for example. The monthly payment would be $222.44 per month. By simply rounding up the payment to $250.00 and paying an additional $27.56 each month, you can shorten your loan by 8 months and save $519.00. Setting up an auto payment through your bank can help with sticking to it, and even take some of the sting away from writing the check each month. Many consumers find it easier to have the money drafted from their bank, and banks are now offering discounts and benefits for consumers who agree to set up some form of auto payment.
- Make Bi-Weekly Payments -
This may not seem like it will have an effect, but think about it. There are 12 months in the year, and 52 weeks. If you make half the monthly payment every two weeks on that same $10,000 loan, you will actually make 13 full payments or one extra payment per year. Over the course of the loan you will not only save $438.32 in interest, but you will also drop almost 7 full payments off the loan.
- End with a Lump Sum
By making a one time, lump sum payment at the end of the loan, you can cut 12 months off your loan and save over $1,000 in interest.
- Make an Extra Payment
Find a time during the year where you will have extra money. Hello tax season! Making a single extra payment each year will save you over $400.00 in interest and have you paid off in 53 instead of 60 months.
- Ching! Ching!
Everyone should have a change jar. On average families that have a change jar can accumulate over $500.00 per year in change. Putting just one year’s worth of change toward your loan will save you $394.00 in interest and 4 months of payments.