We live in a world where buying a car has now become more of a necessity than a luxury. Repayment on car loan requires a lot of planning, like the way it happens when we shop for anything that requires a huge investment. Although a lot of finance providers may give you the liberty to skip your payment for a month or two, it is better to repay your debt as early as possible.
When opting for a car loan repayment option, a lot of people are following the accelerated repayment trend. This means you can pay your loan faster than required. When you pay more than your monthly instalment, it contributes towards paying down your principle amount. This will gradually help in lowering the interest charges which will accumulate in the months that follow.
Here are a few ways which will help you to accelerate car loan pay-off:
A lot of people live under the myth that you cannot pay off your car finance earlier than what you had agreed to. However, this is not the case. You can exercise your right to pay your outstanding balance in advance. One such method is biweekly payment. In biweekly payment, you pay your car loan instalment every two weeks. If you continue this cycle during your auto loan term, your loan will be shortened by a significant number of months.
Pay Extra a Year
If opting for biweekly payment is beyond your affordability, then you can accelerate your loan repayment by making one extra payment a year. Apart from using your tax refunds, bonuses and savings for the purpose you can add an extra amount of money to your each future monthly payment. This will help in accelerating your loan pay off at a faster pace.
Say No to Skipping Payment Option
Skipping payment at the end of the year may sound tempting, but it extends your loan term and adds on additional interest. It will be too late when you realise that more number of months have been added to your auto loan term.
Before you settle for any of the above options, it’s important to enquire which car loan option will be suitable to go along with.
At Volkswagen Finance Private Limited, our Flexible Repayment Options like the Balloon Option and the Bullet Option help with the acceleration of your car loan repayment. While Balloon Option allows you to pay additional payment at the end of loan tenure, Bullet Option requires you to pay additional annual payment as per your cash flows.
Click here to get expert’s advice: www.volkswagenfinancialservices.co.in