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Tag: loan

  • How to Get Rid of Car Loan

    When you feel your car payments have become a burden for you or your family, it is time to learn how to get rid of the car loan. It’s common to see someone made a wrong decision when dealing with their car loan. This often happens when a person is facing bankruptcy. Whatever the reasons are, there are many ways to get rid of a car loan. Follow the step by step guide below to get out of a car loan if you have these questions in mind:

    • How to get rid of a car you owe money on?
    • How to sell your car privately when you have a loan?
    • How to get rid of a car payment?
    • How to get rid of car loan debt?

    how to get rid of car loan

    Step 1: Check your car’s market value

    Understanding your car’s market value is the first thing you have to do. DO NOT estimate your car by just checking a used car websites online. Use a reliable online valuation service such as NADA Used Car Guides or Kelley Blue Book (kbb.com). Kelley Blue Book is widely recognized by both consumers and the automotive industry so the report is trustworthy. In addition, drive your car to at least 2 or 3 local used car dealerships to see what are the prices they offer. There are many factors to determine your car price, for example, body condition, extra accessories, mileage and overall condition.

    Step 2: Check if you have an upside-down loan

    Now you already know the market value of your car, compare it with your current loan amount and see if you have negative equity or not. An upside-down car means you owe the loan more than the car’s value. Having an upside-down loan is very common if you just own the car for 1 to 3 years. If you don’t have a negative equity, congratulations! You can just sell your car right away to get rid of the remaining car loan.

    Step 3: Solutions for upside-down car

    There are a few options you can do if you have an upside-down car. It depends on what you plan to do next. For example, if you no longer need the car and want to get rid of car loan completely, you can borrow the difference. Let’s say you owe $15,000 on the car, and the current market value is only $12,000, borrow $3,000 to pay it off. On the other hand, if you still need the car and want to lower your monthly car payment, you need to refinance. In our Car Buying Guide, we mentioned that refinancing is one of the easiest and simplest way to pay off your car loan faster. Do some research to find out which local banks or credit companies are offering low interest rates for refinancing. Lastly, if you are selling your old car for a brand new car, the only thing you can do is pay the difference. You will need extra cash for the new car down payment too. There is no way to buy a new car without extra cash if you are having an upside-down car loan.

    Step 4: Sell your car privately when you have a loan

    If you are selling your car privately to a friends or someone else, he or she would have to get approved for a new loan in the amount of the agreed purchased price. The new owner’s bank will then pay you the money. You can then use the money to pay off your own car loan. Extra money is needed if your loan is upside-down. Otherwise, you could have some extra money left if the selling price is higher than your loan amount.

    Step 5: Use cash to pay off the car loan

    The best method to completely get rid of car loan is to pay it off with cash. It is always the easiest and cheapest option as there is no extra cost for loan processing fees. With adequate amount of cash on hand, you can contact your lender to discuss the available options to pay it off. Without a car loan, you can live a debt-free life. Last but not least, see also Buy a new car with cash: Smart or Stupid?

  • How to Pay Off Your Car Loan Faster

    Have you ever wondered how to make your car payment go down or how to pay off your car loan faster? If you do, you should really check out how the smart people deal with their loans. According to a research, 70% of people sign up for car loans to buy their new cars. Often, these car loans take almost one-third of their monthly income and they last for at least 48 months up to 84 months. If you feel like you are paying a lot of interest for no reason and don’t want to suffer for 84 months, perhaps you should check out these proven methods to pay off your car loan faster.
    Pay off car loan faster

    Method 1: Pay Your Loan Bi-Weekly

    Instead of making payment every month, you can make bi-weekly payments. This is one of the fastest ways to pay off your car loan early because less interest will be accumulated when payments are applied more often. There are 52 weeks in a year and you will make 26 (or 27) yearly payments using bi-weekly payment method. In fact, you can also shave off the payment for last few months.

    Method 2: Make Extra Payment Whenever You Got Extra Cash

    Pay more is often the best way to settle your car loan early. You can do this whenever you got extra cash and that could save you a lot of interest. For example, pay $500 instead of $428 every month. At the end of the year, you can see an extra $864 is paid to your car loan in your statement. In order to make extra payment, you need to find extra cash, thus, work harder.

    Method 3: Make a Large Extra Payment

    Regardless of when you do it, making a large extra payment can help you to pay off your car loan faster. If your car loan interest rate is 5%, making a $10,000 extra payment could save you $500 dollars in a year. Do no overlook $500 because there are many great cars under $500 dollars.

    Method 4: Round Up the Monthly Payments

    Round up is one of the best techniques to pay off your car loan faster. The monthly payment for a $22,000 car loan with 5% APR and 84 months term is $310.94. You can actually shave off at least 11 months if you round up the amount and pay $350 every month.

    Method 5: Refinance Your Loan

    We mentioned about refinancing your car loan in Chapter 4 of our Car Buying Guide, Car Leasing versus Car Buying. Refinancing is the easiest and simplest way to pay off your car loan faster. Do a little research and find out which local banks are offering super low interest rates on car loans. If you are able to refinance your car loan from 6% to 2.5%, that will be a big saving. Refinance is also an awesome way to make your monthly car payment go down too.

    Method 6: Pay Online or Sign Up Auto Payments

    Nowadays, a lot of things have gone online. Many banks started to offer additional discounts if you pay your monthly car payment online or sign up for auto payments. Pay online or sign up auto payments is a good practice although it doesn’t help you to save a lot of money compared to other methods above. However, it did bring you convenience as well as little discounts.

    See also: Things to consider when choosing the right car