How to Pay Down Your Car Loan

Paying down a car loan can lower your debt-to-income ratio and help you pay off your car early. The average car buyer pays on a vehicle for 60 months. While typical, it's possible to pay down a car loan early and eliminate the debt. There are numerous ways to accomplish this goal. But to achieve this, you'll need to select a realistic strategy and stick with the plan.

Instructions

1

Use your extra money to increase payments. Rather than pay your regular car payment amount each month, add extra money to each payment (perhaps $50 or $100) to reduce the balance quicker and pay off the loan early. To slash your auto loan term in half, double your monthly payments every month, if feasible. Find ways to cut your personal expenses to create additional cash.

2

Modify your loan term. Assess your finances to see if you can pay half of your car payment every other week. Bi-weekly payments reduce the interest paid on auto loans, which helps pay down the balance quicker.

3

Refinance the auto loan. Contact your auto lender to refinance the vehicle loan and opt for a shorter term such as a three-year loan. You'll pay less interest and you'll reduce the auto loan balance faster.