Tips to Pay Off Used Car Loan Faster

Buying a used car is easy, especially with such amazing used-car loan plans readily available in the market. But once you have brought your car home and have got started with paying your loan EMI, you start feeling the pinch of the additional burden on your monthly budget. Who does not like being debt free, that too at the earliest? Well, there are some ways to pay used car loan quickly, regardless of how much or how lengthy your loan is.
 
By paying off your debt sooner than expected, you can reduce the amount of interest you spend on the car loan on used cars. It also frees up funds in your budget for other purposes. So, what are you waiting for? Here are the seven tried-and-trusted methods for swiftly paying off your used car loan:
 
1. Increase Down Payment 
 
Do you have spare cash when buying a used car? If so, why not put this money towards a larger down payment? Paying a higher down payment would result in lower monthly instalments. When you owe a smaller loan amount, you can easily pay used car loan. 
 
 Also Read: Quick Guide on Pre-Owned Car Financing

2. Prepayment
 
Did you get a pay rise? Or have your investments yielded a larger profit? In such cases, you can use the extra money for prepayment or part prepayment. This not only lowers the loan amount but also saves you a lot of money on the interest that would otherwise be paid by you. Borrowers can pay car loan prepayment online. However, it is a wise decision to double-check the prepayment fees before proceeding. Aside from used car interest rates, the lender charges a small prepayment penalty on the remaining loan balance.
 
3. Use Unexpected Income
 
To pay off your used car loan quickly, use your tax refunds, pay increments, and performance-based bonuses. Paying off your used car loan sooner would relieve your stress and allow you to plan your future holidays ahead of time. Using pay raises for used car loan financing EMI payment is an effective method of paying down a car loan.
 
  Also Read: All Your Car Loan Questions Answered

4. Round-up
 
One of the simplest strategies for paying off a used car loan early is simply rounding up each month's used car loan instalment payment. Let us use an example,
 
Assume you have a monthly EMI of Rs 5,400. You can pay Rs 6,000 every month by rounding up the amount. You will be paying an additional Rs 7,200 per year in this manner. These minor measures will pay off in the long run.
 
The higher you round up, the more impact it will have on your loan. 
 
5. Top-up loan
 
Financial institutions now provide top-up loans for second-hand car loans. The loan to value is determined using the current market valuation of your vehicle or the existing used car loan. Depending on the financial institutions and the borrowers' EMI payment history, you can acquire a top-up loan of up to 175 per cent of your existing loan. If you are having trouble paying off your finance used car loan, consider a top-up loan. The interest rates on a top-up loan will be lower than those on your existing car loan.

 
 
6. Reduce Unnecessary Expenses
 
Try adding money to your finance used car loan monthly instalments by temporarily eliminating unnecessary monthly expenditures. Reducing your outing and dining spending as well as foregoing new dress and expensive purchases for a year or two can help you in paying off your car loan on used car faster.
 
7. Make extra-income
 
If you are having trouble raising extra funds to pay used car loan, look for a part-time job or business to do in your spare time. You may rent out a room in your house or start an online business. Using your excess income for payment on used car loan will reduce the amount to be repaid.
 
  Also Read: Planning to Purchase a Second-Hand Car via Used Car Loan? Here are 5 Questions That You Need to Ask Your Lender

To Conclude
 
If you do not want to dig a hole in your pocket, keep your used car loan balance to a bare minimum. Using the above tips, you can pay a used car loan faster.  The sooner you pay off your finance used car loan, the more funds you will be left with to put into your account, allowing you to reach your next financial objective quickly.