How can I pay down a car loan faster without making "double" monthly payments?

Question

I have 5 years of payments left on a car I hate. I cant afford to make more than one monthly payment on it but is there anything I can do to make it so it wont actually take me 5 years to pay it off? Meaning, is there any "rule" saying (for example) if I pay an extra $10.00 a month, that will shave a year off the length of the loan? Just using that as an example of course.

Answer 1

You would have to calculate it out based on your interest rate and how much your payments are, but anything you can pay off over the minimum payment will reduce the time it takes to pay it off. I typically paid between 25 and 50 over (not every time but as often as I could) and I shaved almost a year off.

Answer 2

1

Answer 3

Yes they will pay less for hte car because, anything over the payment gets applied to Principle and then the next month's interest payment is based on a lower principle amount so, even paying 25 a month more can really pay off. If they can pay another hundred a month then again, they will really save a bunch. Keep in mind that interest is accrued daily so, if they make two payments a month then the overage won't all go to principle so, to get the biggest bang for the buck they need to make the payment + extra in the same payment. Again, make sure there is no penalty for paying it off early.

Answer 4

I was advised by a loan officer to round your payment up to a round number, for example, if your payment is $269, make a payment of $300 each month, everything you pay over the regular payment amount goes directly to the principal of the loan, not to interest or anything else, and you will pay it off sooner.

Answer 5

ANY extra money you pay, after your regular monthly payment, goes directly to the principle. So even if you can only afford an extra $20 a month, you will be chipping away at what you owe. The more you can afford each month, the faster you will get to NO CAR PAYMENT!

Answer 6

Yes, assuming you have a normal compounding interest loan (where the interest is based on the current balance of the loan), paying any extra amount will help pay down the loan earlier than scheduled. How much earlier depends on how much extra you put in, of course.

To figure this out, here's an "Early Pay Off" calculator you can use. Just enter in the terms of your loan and the extra amount per month you will pay, and it'll tell you how much interest you'll save and how much quicker your loan will be paid off.
http://www.driverslane.com/calculators/amortization.html

Answer 7

you will not shave a year off by only paying $10.00 extra per month.
However, if you can make one extra full payment per year you will save on interest, thus helping to pay it off sooner.
also, I too had a car I hated... I was upside down on the car note but eventually traded it for another, still a little upside down now, but I like the car I have and it doesn't own me!

Answer 8

Not really. You can call the bank and see if they allow you pay on the principal of the loan, which might have an effect, but not at $10 a month (that's only $120 a year). A lot of banks actually penalize you for paying the loan off early.

Your best bet might actually be to trade it in, though that's digging a hole...

Answer 9

In NY, banks are not allowed to charge pre-payment penalties. Meaning, you can pay your payment, write a separate check and indicate on it that it is for "principal". By doing this you are lowering the total amount owed to the bank, the more you pay the sooner it'll end.

Answer 10

yes, you can normally do that.
Read the papers you signed when you bought the car. That should tell you.