Looking to pay off a car loan faster?

Has your hummer become a bummer? You've probably heard it said many times before- it's impossible not to have a car note. It's practically an unspoken part of the American dream right? White picket fence, 2.5 kids, and a car loan! How else could anyone afford to drive? WRONG. Perhaps you've wised up and realized this is a horrible (and false) limiting belief that keeps you middle class and in debt, and now you're looking to learn how to pay off a car loan faster.
The truth is, millions of Americans know that consumer debt, and specifically car debt, is the ultimate wealth killer. And as I'm sure you've figured out by now, the stress of a too-high-for-comfort car note really takes away the thrill of that new Jeep Grand Cherokee with extra cup holders.
In this post, I will go over the best methods to pay off your car loan faster. They are some of the same methods I used to pay off over $150,000 in student loans in just 16 months. If there's anything I know, it's paying off debt early, and with a vengeance.
This post is all about how to pay off a car loan faster.
1. Dream a little...
We've all heard it before- "Know your why". Trite as it is, it's important. Why do you want to pay off your car loan faster? I bet many reasons pop into mind right away. Perhaps you've decided to become debt-free, and this is your first step. Perhaps you repeatedly find yourself with too much month at the end of your money, and you've realized your car loan is largely to blame. Or maybe you're just sick of throwing your hard-earned money away on a depreciating asset.
All good reasons. However, they all have a negative spin as they focus on what's currently wrong and what you don't want in your life. Before you get started with this amazing goal of paying off your car loan early, I want you to think not only of what you're getting rid of, but of what you're gaining.
Start here- how are you going to feel once your car is paid off? Take 5 minutes and run the scene in your head in vivid detail. You make the phone call, you write the check, and your car debt is gone! What do you say? How do you feel? What will you do right after? How does the future look now?
Think of what you'd like to do with that extra room in your budget. A nice vacation maybe? A charitable endeavor? A new pair of shoes you've been eyeing? Unlimited trips to your favorite all-you-can-eat Indian buffet? The sky's the limit! This is why paying off debt is so great, because it frees up room in our budget to spend on the things that actually bring us joy.
Positive emotions play just as important a role as negative emotions do, so it's important we use them to our advantage in our debt-free-journey. Paying off debt takes focus and perseverance. Make sure you take time to think of all the positive aspects of paying off your debt, instead of focusing solely on how sucky having the car debt is. Your future self is the reason this works - make that your main character!
2. The Art of the Wheel
The next step in paying off your car loan faster is to consider refinancing your loan. But first know that there are some cons to refinancing, which I'll go over.
If you've made more than 1-2 years of on-time car payments in full (no missed payments ever), you might be eligible to refinance your car loan for a lower interest rate. If this is you, call and ask if you can get a lower rate. If approved for a lower interest rate, you can lower your monthly payment and save money on interest. This can free up room in your budget to put even more towards paying off your car loan early.
BEWARE: The con of refinancing your car loan is that you will feel like you did something when, in reality, you did nothing. You didn't actually make progress on paying off your debt, so it's no time to pat yourself on the back. And in truth, if you're focused, you'll pay off your car debt so quickly that a lower interest rate won't make much of a difference. You probably bought yourself a nice dinner out or two, but you're still in financial trouble! Don't let this weaken your resolve.

3. Budgets > Bugattis
Alrighty, now that we've established that your car loan is giving you the bu-ick, it's time to get on a detailed, written plan AKA a budget.
The best way to do this is to go through last month's bills and assess the damage. You may feel like you Cadil-lack room in your budget to put towards your loan, but you do. You CAN af-Ford to cut expenses in certain areas, but you can't do so until you know exactly how you've been spending your money. And yes, I'll stop with the puns. Now wipe that cringe off your face and keep reading.
If you're wondering how you can pay off debt even with a low income- read here!
I love to use a budgeting app, but an Excel document or a pen and paper works great too. I use EveryDollar, and in my opinion it's the best budgeting app available. It's free, but I pay for the premium subscription which I think is worth it as it cuts down on the time I spend budgeting. I tried YNAB, but to be honest, I like EveryDollar a lot more.
Audi-t your past expenses (i'm sorry I couldn't resist please keep reading) and see where you can make cuts. Dig deep! Be merciless! Remember, the more you sacrifice now the faster you're debt-free. Each expense you cut is, ultimately, time you won't have to work to earn that money. Target the unnecessary spending first, like eating out, hair appointments, vacations, etc. Cut those habits out temporarily, and you can have them back (and more!) once you're out of debt.
4. Save the Date!
It's time to commit to a timeline and set a date to pay off your debt.
One of the most motivating things I did when paying off my student loans was to use a debt payoff calculator. I was able to see, in real time, how quickly I could become debt-free if I increased my income and cut my expenses. I saw how quickly I could pay off my debt if I increased my income, which made me more motivated to cut my expenses. I loved seeing how much I could move the debt-free date closer and closer. Run different scenarios- what if you worked every other weekend? What if you doubled your hours at work? What if you cut your grocery expenses in half? Chances are, you'll realize you can pay off your car loan faster than you thought!
Once you have the date, mark it in your calendar! You could even post it on your fridge for motivation.
5. Increase Your Income
Your income is the most powerful tool you have to tackle this car debt!
It's time to take advantage of that 5-9 after your 9-5. Every free hour you have in your day is money you could be paying towards your debt. It's time to drive your not-yet-paid-for-car to work! You shouldn't be out spending money anyways. The more you work, the faster your car loan is paid off. And once you're debt free, your time is your own. You won't ever have to work overtime again unless you want to.
When it comes to looking for extra work, you want to be paid the highest wage possible. Overtime is the best place to look as it often comes with an OT differential, giving you more bang for your buck! DoorDash isn't the only side hustle out there, there are tons of opportunities for extra income. Look within your current industry first, as that's where you'll likely earn the most.
Next up, Liam Neeson isn't the only one with special skills- think about if you have any interests or talents you can earn money from. Perhaps it's teaching music lessons or tutoring in French. I am uniquely skill-less, so I settled for dog-sitting when I was looking to make extra cash!
You can also consider selling things that you don't need or want anymore. I was able to put $1,000 towards my debt by selling some jewelry I no longer wore.
It isn't fun to spend all your time working, but remember how it's going to feel once you've paid off your car and you can quit for good! This is when the importance of step #1 comes into play!
6. Never Make the Same Mistake Twice
Gus Fring said it first! And we'd be wise to heed his advice.
Don't find yourself back in debt after you've worked so hard to pay off your car loan. A key part of paying off debt is to make a plan not to go back into debt. Never ever!
This is part of the reason that deep sacrifice in order to pay off debt helps ensure you won't repeat your past mistakes. The misery of working overtime every weekend is sure to stick in your brain the next time that new car commercial comes on. Nice try, Toyotathon! We choose the free Downton Abbey Marathon.
There are several steps you can take to avoid getting back into car debt. For one, make a written, detailed plan to save up cash for a used, cheap car. Plan to drive it until you can save up cash for a nicer, more reasonable, used car. New cars are usually a costly choice; buying a reliable used car and paying cash typically wins. If you value your money and want to become wealthy, don't overspend on depreciating assets. Instead, buy used, reliable cars. Even with added maintenance costs, you come out way ahead. Oh, and avoid leases like the plague.
What is your debt free date? Let me know @ShesFinanciallyFree1 !
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