Car loan payments are second only to home loan payments in the pecking order for major monthly expenses. It is however, very important to pay off your car loan before schedule since the extra money can go a long way in building up your savings. While cars are a necessity of modern life, making sure we have the right payment plan for them is also as important, if not more so.
Finding the right deal for your car loan can go a long way in securing your financials. Moreover, clearing your car loan payments before time can make sure that your credit score shows a marked improvement.
There are some very basic ways to manage car loan payments and all they take is a little bit of due diligence. Here are a few:
1. Don’t Skip Payments
While tempting, skipping payments is a slippery slope towards letting your car loan get out of hand. So long as you can, and there are no extenuating circumstances, making monthly payments on your car loan should be a habit. It doesn’t matter if there are holidays or expensive purchases that offset your monthly budget, making sure you do not skip payments is a priority.
2. Make Extra Payments
It may take a little bit of a push, but try to make at least a couple of extra payments every year. If you get a bonus at work, or come into an unanticipated windfall, make sure you utilise the money towards repaying your car loan debt. Finding extra cash on hand can be very alluring, you’d do well to curb that enthusiasm and spend it on clearing the car loan.
3. Find The Right Rates
One of the most important things about getting a car loan is finding the right payment option for you. Take a long hard look at your financial situation and figure out how much you are willing to spend every month. Choosing a loan with a short payment tenure may seem like pressure, but it is this pressure that will encourage you to pay off the loan faster. Loans with long payment durations may show a lower interest rate but you will end up paying more, cumulatively, over the duration of the payments.
4. Round It Up
One of the best ways to chip off the amount of time you need to make your payments is to always round off the instalments. If you need to pay Rs. 9,570 every month, pay Rs. 10,000. These additional payments will build up to eliminating at least a couple of months from your payment schedule. Do not be shy of upping the payments if you have the bandwidth.
It will be counter-productive to rush into signing any loan documents with adequate research. Compare the offers on hand with professional financial services to find out which option is the best for you.