The ultimate guide on paying off your car loan

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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The two golden rules for when it comes to paying off your car loan early are; meeting payments on time and paying extra when you can. This might sound fair and well, but how do you implement it practically into your life without finding yourself trying to make ends meet? Here are a few practical ways you can cut down expenses to finally pay off your car loan.

Maybe it is time to make a switch

Before you even consider saving to help pay off your car loan, you need to ask yourself if the loan is still affordable. Australians go big when it comes to getting car loans. Recent data released by the Australian Bureau of Statistics show that $8.5 billion was borrowed to purchase our cars. If your current loan is causing you to squeeze every penny you have out of your wallet, then maybe it is time to make a switch. By comparing car loan quotes online, you can walk away with an affordable interest rate that can be as low as 5% per annum.

Choose a loan term that is affordable

A good point to keep in the back of your mind is that cars depreciate. When considering financing through a loan you will have to consider this along with it. You might be still paying off the original value of your vehicle through a car loan, but that vehicle will continue to depreciate. Choosing a loan that has short loan terms can make economic sense due to its affordability. Go with a loan that has terms that are flexible to work with your financial circumstance.

Make some lifestyle adjustments

Aussies love having a good time, but having a good time can come at an expense. A survey released by Mozo revealed that Aussies spend more than $34 billion a year on restaurants, cafes, takeaway coffee and lunches. There is no need to cancel all your lifestyle activities and lock yourself in a cave. However, putting off one of your vices such as a $4 coffee can save you an equivalent of $208.

Keep paying your car loan as one of your top priorities

There are times where life gets extremely busy, and a bill or two can slip your mind. One way to prevent this from happening is to make sure that you add your car loan to your list of priorities of bills that you need to pay off before your salary arrives. Once you have calculated the costs and removed it from your salary, you can train your mind to only think about the remaining amount. This will make it easier for you to not go out and spend the money you are supposed to be paying towards your car loan.

Consider refinancing your car loan

Refinancing your car loan may not work for everyone, but it is one sure way to get a better interest rate and flexible payment options with your lender. The benefit of having a low interest rate can help you pay off your loan sooner giving you more space to breathe in your four wheels. Refinancing also offers a fresh start for you to renegotiate things such as the payment date.

Always remember to compare. Choosing comfortability instead of looking outside your current lender can result in you missing out on saving big financially.

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