Yet, the stress of maintaining your own vehicle and its monthly repayments can be difficult, which stops you from enjoying the luxury of owning your own car. Lucky for you, there is a way that you can pay off your vehicle finance faster, regardless of the loan amount. If you’re interested, read our five top tips down below.
- A good budget is important
Before anything else, it’s important to have a good budget for yourself. This is the first step in making sure you are able to pay back your car loan faster. Before you apply for finance, you need to have an idea of what you can afford and how long you plan on repaying your monthly installment. Make sure you’re being realistic with yourself when drawing up your budget.A great way to free up some money would be to settle most of your outstanding debt before going to a lender. That way you won't suffer as a result of taking on more than you can afford to. Once you have settled your debt you can go to a lender and reach an agreement that works for you.
Another great way to budget for a car is to use a car repayment calculator - that way you can determine how much you can afford. The car finance calculator will give you an amount but the rates quoted are guidelines only.
Vehicle finance calculators will make creating a budget easier. When you have all the numbers written down, it becomes easier to really see how you can pay up your debt. While thinking about your budget, you should also think about whether you’re purchasing a brand new vehicle or a second-hand. Second-hand vehicles are more affordable and you could save more money in the long run. Make sure you find a vehicle that is still of good quality.
- Cut back on spending
In order for you to pay up your financing faster, you need to cut back on spending large amounts of money on items you don’t need. You can cut down on takeaways and impulse buying. Those are two of the main reasons people don’t notice their money disappearing because they purchase things they don’t really need.You could cancel memberships and accounts that you rarely use, as you end up wasting money that you could be using for something more valuable like paying your car finance. Instead, you can find other fun recreational activities that cost less or are free that you can attend. When you’re cutting back it doesn’t need to feel like a task. There are plenty of things you can do which cost less and are still fun.
- Pay more than your installment amount
Another great way to settle your car loan would be to pay more than your installment amount. You don’t necessarily need to do it every month, but it is an effective way of lowering your loan amount.Once you have freed up your money you could add more every single month. Registered credit providers in South Africa will give you an amount you need to pay monthly. But you could still pay more than that. If you receive income more than once a month, try making payments each time you get paid.
See next: Does refinancing a car hurt your credit?
So you will need to plan that out carefully on how you will be settling the lump sum. There are ways you could settle a balloon amount - you could pay it off immediately, trade in your car and use that money to pay the balloon loan, or you could refinance the balloon payment.
It never feels good being harassed by lenders therefore, make sure you pay your vehicle loan on time.
Final thoughts
Financing a car doesn’t need to be a stressful or unhappy experience. As mentioned above, there are many ways you can pay your car loan faster than you otherwise would have. Just make sure you don’t pressure yourself too much by trying to settle the amount much faster. By using these top five tips you can pay up your loan without it having a large impact on your finances.
- Take out a balloon payment
If you’re struggling and need to pay a lower interest rate then you could apply for refinancing. A balloon payment can allow you to pay a lower monthly installment which you could finish paying sooner. But keep in mind that there will be a lump sum at the end of your term you would need to pay.So you will need to plan that out carefully on how you will be settling the lump sum. There are ways you could settle a balloon amount - you could pay it off immediately, trade in your car and use that money to pay the balloon loan, or you could refinance the balloon payment.
- Make sure you don’t skip a month
Skipping a month would be detrimental to your goal of settling your car loan faster. Not paying your monthly installments on time would lower your credit score and you would need to pay arrears.It never feels good being harassed by lenders therefore, make sure you pay your vehicle loan on time.
Final thoughts
Financing a car doesn’t need to be a stressful or unhappy experience. As mentioned above, there are many ways you can pay your car loan faster than you otherwise would have. Just make sure you don’t pressure yourself too much by trying to settle the amount much faster. By using these top five tips you can pay up your loan without it having a large impact on your finances.
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