4 Ways To Pay Off Your Car Loan Faster

Posted by on January 06, 2020 @15:50:21 EST

No matter how much you may love the vehicle you’re driving, there’s no getting around the fact that the car loan in Toronto you’re paying back is probably a little irritating. After all, it can often make up the bulk of our monthly expenditure, and the severe consequences for missing payments are enough to give even the calmest among added stress. 

In an ideal world, car loans in Toronto wouldn’t need to last any longer than a couple of weeks to pay back fully, but that’s not the reality. In fact, most loans tend to last between 48 and 96 months, so you can expect to get used to the fact that you’ll need to make the payments every week.

However, there are a number of easy-to-apply strategies you can use in order to pay off your car loan a bit quicker. While none of these are going to drastically reduce the total amount of the loan, they are all going to help a little—and if you can make them into habits that stick, you’ll have your car loan in Toronto paid off before you know it.

Here are the top 4 things you can do to pay off your car loan that much faster.

1: Secure Some Extra Cash

While it may sound a little dubious (who wouldn’t want some extra cash?), hear us out on this one. Getting some extra cash to spend on your car loan in Toronto may well be much more possible than you think it is, especially if you’ve never looked into the possibility before. 

A good way to start is by selling things you don’t need. Amazon and eBay are great ways to turn all that stuff lying around your home into a little extra change, which can go a long way in the overall scheme of a long-term car loan. Books and clothes are both super options, because everybody wants them and because they’re not very heavy, so shipping won’t set you back too much.

The idea is to spend any extra money you have on your car payments, within reason. We don’t recommend taking money away from the essentials—this is strictly for disposable income. There’s another intuitive way you can sort yourself a little extra income too, and that’s getting signed up with one of the lift-sharing services that have become so popular as of late.

Companies such as Uber and Lyft have made it possible for people to turn their own vehicles (even if they’re not completely paid off yet) into cash cows. As side hustles go, it’s a pretty reasonable way to start. And there’s no reason to think you need to turn it into a full-time profession, or even a part-time gig. Any little extra money you’ll be able to make will go a long way towards paying off your car loan in Toronto, if you’re able to guarantee that the money you make will go towards your loan.

Making money with Uber and companies like it can be as simple as picking somebody up when you’re on the way home from work, or setting aside a little time after the week’s grocery shopping to do some ferrying. You could even become a driver for Instacart, which would involve helping people to do their shopping remotely using your car. Again, it’s not going to need to be anything incredibly serious or hardcore for you to see the benefits. As with any source of side income, the most important aspect by far is the ability to be consistent with your plan and to stick to it, even when you don’t feel like it. 

If you already have a side hustle, consider re-routing some of that money towards your car payments—and if you don’t, check out this piece for some great ideas. It might not be as immediately fulfilling as a meal out or a new gadget to play with, but once your loan is paid off you’ll be really glad you took this step.

2: Try To Make Bi-Weekly Payments

More often than not, car payments aren’t financially crippling, or at least they certainly shouldn’t be. If you’re able to comfortably hit your payments as matters currently stand and still have money left over, it might be a good idea to think about switching the payment plan on your car loan in Toronto towards a bi-weekly structure.

The idea isn’t to double the amount you’re paying per month. Rather, what you want to do is pay half the amount every two weeks, instead of the full amount once per month. There are two main advantages to a bi-weekly payment plan in terms of finances, and they’re both long-term, sustainable improvements over a standard monthly automobile loan deal.

The first is that you’ll actually be making an extra payment per year, given that there are 52 weeks, but only 12 months. It sounds sort of strange, but those extra few days per month coalesce into a total extra month by year’s end, so by paying bi-weekly, you could find yourself shaving a few months or more off your total loan term.

The second advantage is that less interest will build up because you’re making smaller payment amounts twice as often as a larger amount once a month. The less interest you have to pay, the more of your money is going directly towards the value of the vehicle, which leads to a happier financial situation all-round.

Even though it’s difficult for a lot of people to organise their monthly income in such a manner that they’ll have enough ‘liquid’ money to spend on bi-weekly car loan repayments, it’s a target worth aiming for — because the benefits are so potentially huge to your quality of life as well as the quality of the loan you’re paying off. If you’re able to arrange a situation where you can structure your own income to allow for this, you’ll find that your car loan will be paid off that much quicker. And the best part of this technique for sorting out your car loan in Toronto is that once you get it set up (assuming you’re able to), it practically runs itself.

You won’t have to worry any longer about whether or not you’re doing everything you can to get the loan paid off as quickly as possible, because it’ll be happening without you even needing to pay it too much attention. If you’d really like to pursue this option for your car loan in Toronto but are having a hard time figuring out how to sort out your income to allow for it, it might well be worth negotiating with your place of work to see if there’s not some other kind of schedule that you could take advantage of. Crucially, you won’t be asking for more money — you’ll only be asking for a slightly more flexible way to receive the same amount of money. It’s worth a shot, and the benefits really are significant when it comes to how soon you can finally get that car loan in Toronto paid off.

3: Round Your Payments Up To The Nearest Hundred

This step may not be possible if you’re stuck for cash, but if you aren’t, it can be a really easy way to speed up the total amount of time you’ll spend paying for your car loan in Toronto. The logic behind this technique is straightforward, and once you get it going, you’ll be amazed by the results.

The idea is to round every payment up to the nearest hundred. For example, if you’re paying $378.54 every month, just pay $400 instead. In all likelihood, if you’re managing to make payments for a car you’re not really going to miss that extra $21.46. You will notice it, though, once the end of the year comes along and you’re already three or four months ahead of schedule. 

It’s a painless way to put some extra money towards your car payments, and it’ll also make balancing your budget month by month that much easier, because nice, round numbers are a lot easier to factor into calculations. While it won’t be a good option for you if you need every last dollar, if you’re relatively comfortable in your financial situation, this is probably the single best way to speed up the amount of time left on your car loan in Toronto.
As with all of these techniques, however, rounding everything you pay up to the nearest hundred simply isn’t going to work if you don’t commit to spending all of that extra money on paying off your car loan in Toronto. For that reason, if you’re prone to spending a little liberally, it might be best to go for another technique. On the other hand, if you know for a fact that you can stick to the plan you set out for yourself, this single strategy will go a long way towards getting you ownership of your vehicle as soon as possible.

4: Try To Make One More Payment Per Year 

Committing to a long-term plan of making payments every two weeks rather than every month is great, and will no doubt go a long way towards helping you to pay off your car loan faster, but for a lot of us we simply can’t summon up the cash flow in order to make this idea a practical reality. The truth of the matter is that in order to make bi-weekly payments, you not only need a steady flow of income, but you need a steady flow of cash which you’ll have free to spend on something in particular. 

This is the crucial distinction between simply having enough money ‘on paper’ versus being able to actually use those extra figures to pay off your car loan that much faster. 

So what are you to do if you’d like to pay off your car loan faster but simply can’t summon up the extra disposable income? Well, you have a number of different options, all of which are well worth pursuing no matter who you are or what you do for a living. One of these is committing to making one extra payment every year. While this might sound a little counter-intuitive, hear us out. It might just make more sense than you think.

One reason a lot of people don’t consider making an extra payment a year is that they can’t motivate themselves sufficiently to commit to the changes required. And probably the single biggest factor when it comes to this tricky state of affairs is the fact that it’s hard to see the results being manifested in front of your eyes if you only do something once a year, as opposed to doing something every month or every couple weeks.

Fortunately, however, the math really does check out on this one. If you decide to pay one extra repayment amount on your car every year, all you’ll really have to do is divide whatever you’re paying each month by 12. Once you’ve done that, you’ll have the figure you’ll need to add to each of your current monthly payments in order to meet your target. By adding on even this small figure to each of your current monthly financial commitments, you’ll be able to shave off months upon months from the total term of your car loan, meaning that the vehicle can become yours that much quicker.

In Conclusion

So there you have it: the top 4 ways to pay off your automobile loan a bit faster. Of course, it would be great to be able to apply all of these; and if you can, congratulations! You’re in a good spot and should have that car all to yourself in no time. 

Even if you can’t, however, putting just one or two of the above tips to work will have a noticeable effect on the total amount of time you spend paying off your Toronto car loan. As with anything financial, the key is to make small, good decisions with regularity. Don’t forget that it’s a marathon, not a sprint.

It can often be really difficult to secure approval for a car loan if you’ve got a bad credit score. Did you know that here at Autoloans.ca we don’t prioritize customers with better credit scores? Every application we receive is given the same amount of time and attention, so if you’ve been having a tough time, why not send us an email? We’d love to help you out in any way we can.

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