For many Americans, auto loans can be among the most difficult to pay off. In fact, 6 million people are behind on their car payments by 90 days or more. But while paying off off any type of loan can have its complications and difficulties, it’s important to know some ways to make the process both quicker and easier for yourself. Here are just a few smart ways you may be able to pay off an auto loan faster.
Consider Bi-Weekly Payments
First, this fascinating trick can help you to pay off your loan faster and possibly without even realizing it. Here’s how it works: instead of paying your bill monthly, cut the amount in half and pay every other week.
“This is kind of a cool trick if you have never heard of it before. If you pay every two weeks, you will make 50 percent of your payment 26 times as opposed to a typical 12 payments a year. Essentially, you will be paying one extra payment in its entirety a year,” writes Emily Delbridge on The Balance.
Another benefit of this technique is that you’ll be saving on interest as well. Bi-weekly payments result in less interest over the course of the loan while your balance is decreasing. It’s definitely a technique worth considering, regardless of your loan balance or length. Plus, you can easily find a bank that has various online banking services to pay scheduling payments easier, including online bill pay, mobile deposit, and more.
Snowball Your Debt Payments
This is a technique that’s ideal for those who are paying off more than just auto debt. It’s pretty simple: start with the lowest amount of debt you have and get it paid off using any extra money. Then, continue to take the money you were using to pay off that debt and apply it to your next debt. Continue to pay off your debts — this can be done starting with the lowest or highest amount of debt — and you’ll notice just how much quicker you’re paying off your debt.
Ultimately, understanding the creative ways to save money and apply it to your auto debt can help you become totally debt-free. For more information about online banking services, contact First Bank of the Palm Beaches.