Did you know that the interest you pay on your car loan is based on the amount of principal you owe? By paying down your principle, you are reducing the amount of interest you will pay. The best part is it is actually easier than you may think to reduce your car loan.

Create a Foundation

Before you start paying off your car loan make sure you have an emergency savings. This will ensure you keep making those extra payments if you end up with a financial emergency. Read more about starting an emergency fund here. 

Know Your Budget

You need to know you have the money to spare and how much. You don’t want to end up putting yourself in a predicament by applying money you don’t have. 

If you don’t have the extra money, look at your budget to see where cuts can be made to apply to your car loan. Even small amounts a week will add up to make a difference. 

Hustle Hard

If it is really important to you to pay off your car loan earlier you will find a way. Find a side hustle that you can apply 100% of what you make to your car loan. You can find some great hustle ideas here.

Pay the Principle

This part is extremely important when you are trying to pay off your car loan sooner. You need to ensure you are making payments towards the principle and not the interest. Trust me, unless you are specifying where exactly that money is going, it is going towards interest. 

Depending on how your loan is set up you may be able to select this on your online payment. If not you need to call your lender to find out how to make payments towards principle. 

Don’t Skip a Payment

Every year, usually towards the holidays, my lender allows people the option to skip a payment. This then frees up some extra money for you to spend on gifts and such. However, skipping this payment will only allow interest to accumulate and ruin all the hard work you have made with extra payments. So as tempting as it may be, do not skip a payment. If you really need extra money around the holidays read my post about having a Debt Free Christmas.

You Got This!

A car loan is easier to pay off sooner typically because it is already a short loan. But imagine the feeling of not having a car payment and being able to apply those payments to any other debt you may have. It is a great feeling when you know you made a vision a reality with a little perseverance and hard work. You can do this, just remember why you want to and that even a little bit of money can go a long way!

If you are looking for a cute way to keep track of your progress you can find these cute printables on my Etsy shop for debt payoff here.