Are you stressed about being turned down for a car loan due to poor credit? Canada Drives has got you covered. We specialize in matching individuals who have lower credit scores with lenders across Canada. At Canada Drives, we can direct you to a lender who can provide the financing you need to get into a vehicle as soon as possible
Now that you have been approved and no longer have to worry about where to get your vehicle financing – the next step would be to learn about some methods to manage your car loan. These strategies will serve as important guidelines to keep in mind throughout the entire process, even prior to obtaining your loan.
The key to managing a car loan is to find a way to pay it off as effectively as you can. Here are 3 specific methods of paying off your car loan faster that may come in handy as you enter into a new car loan agreement.
1) Making a Lump Sum Payment
One approach to pay off your car loan quicker is to make lump sum payments whenever you’re able to. The timelines for this lump sum are not set in stone, and for the most part can be made at the convenience of the loan borrower. Let’s say you receive some additional money and can afford to make one decent sized payment. By paying off a larger portion of your loan, you will be able to speed up the rate at which you pay. Reducing the overall size of your loan can ultimately lower your payments and decrease the amount of time it will take to pay the loan off.
2) Increasing your Monthly Payments
Increasing the size of your monthly payments is another strategy you can use to pay down your car loan. You can shorten the time it takes to pay down your loan by increasing payments, even by boosting your payment rate $100 to $200 a month. The larger the payment increase, the faster you can speed up this process. Consistently increasing the amount you put towards your loan, for several months to a year, can significantly reduce the length of your loan term. If it is your dream to be a car owner – you can reach this objective sooner and help alleviate some of your payment responsibilities in the future.
3) Downsizing your Car
Lastly, perhaps it isn’t your current car loan but the vehicle itself that needs to be adjusted to meet your payment needs. If the size of your loan is too much for you to handle and you are struggling to pay it off, it may be that your car is too expensive for you at this time. That being said, you may want to consider selling or trading in your current car for a more cost-efficient choice. There are a variety of vehicle models that can offer a safe and affordable option – while still being attractive to drivers. By switching to a less expensive car, you can take on a smaller car loan in order to significantly lighten your credit and payment loan. With a smaller loan and consistent monthly payments – you can work towards paying off your loan in a much shorter time frame. If this last concept seems like it may be a better fit for your current situation - downsizing to a smaller, less costly vehicle may help you make a lot more headway on your loan repayment goal.
Ultimately, paying off your car loan faster can substantially improve your financial position. If you are suffering from poor credit and struggling to access additional credit for future loans, then changing the way you pay off your loan can be extremely effective.