How to Get Rid of Debt Fast by Paying Off Your Car Loan Faster

How do you get rid of debt fast? It sounds like an easy enough question, yet the truth is that it depends on how much debt you have and how much money you earn. Are you looking to get out of debt faster so that you can start saving up for something important like an emergency fund or retirement? Or maybe you just want to be able to buy something special without having to take out a loan. Here are some practical tips on how to get rid of debt fast by paying off your car loan faster.

• The Average Car Loan Amount

Most car buyers can secure a loan for between $10,000 and $30,000. If you purchase a used car for less than $15,000, you will probably only be able to get an auto loan for about 80% of that amount. If you need financing for more than 75% of your new car’s value, it is likely that your bank or credit union will require that you have perfect  credit.

• The Average Interest Rate on Car Loans

Since car payments can be costly, people often wonder how to pay off a car loan faster. According to Experian Automotive’s State of Auto Finance study, which analyzes quarterly trends in financing, buying and leasing new and used vehicles, during 2014 Americans had an average finance charge on a new vehicle loan of $321. This is up from 2013’s average interest rate of $316.

• When Should You Use Auto-Pay?

It’s worth setting up auto-pay on your auto loan, especially if you’re a little short on cash from month to month. This way, you won’t be tempted to skip a payment. However, if you have extra money in your budget or only have one car payment, then it may not be necessary.

• Facing Up to the Financial Reality

Having a car loan is an unavoidable fact for most people, but  that doesn’t mean you have to settle for whatever your lender offers. Calculate how much money you need each month in order to pay off your debt faster, and set up direct deposit so you don’t overspend. If you are struggling with a high interest rate on your loan, shop around for better deals. Compare auto loans from top lenders based on interest rates and other factors.

• What Happens If I Can’t Pay My Vehicle Loan ?

If you’re struggling to make your payments, most states have a statute called a deficiency judgment, which means that if you default on your loan and can’t pay it off in full , then your lender can sue you for not only what you owe but also any expenses they had associated with collecting from you. This usually includes attorney's fees and court costs, which can be thousands of dollars more than what you originally owed.

• Automatic Payments Are Not Automatic Debt Repayment

Auto-payments can help you stay on top of your bills, but don’t think you’re automatically paying off debt because of them ; instead, think about how much interest is accruing and what that means for your bottom line. If there are still debts left at month’s end, consider cutting back somewhere else so that you can maximize your car loan payments. It may seem counterintuitive, however, if it helps pay off debt faster, it will save you money in interest over time.

Conclusion

So there you have it – everything you need to know about getting out of debt faster. The most important thing is that you’re proactive and not waiting for something bad to happen. Start your journey today!