Paying off loans (such as a credit card, mortgage, or auto loan) is such a great feeling of accomplishment. Scheduling that regular payment over months (if not years), seeing that balance grow smaller and smaller over time. Then, getting to that oh-so-happy day when the balance is paid in full. Eureka!
What if you could pay off your credit union auto loan faster? Aside from what you would save paying in interest, think of all the other ways you could use that extra money. Maybe towards another debt, retirement savings or a long-awaited vacation! You can reach this with some minimal adjustments in your financial management and a little help from Dane County Credit Union.
Bi-weekly Payments
By switching up your payments from monthly to twice a month, you’ll actually pay less interest because payments are applied more often and interest doesn’t have as much time to accrue. Plus you will even sneak in an extra payment each year and won’t even feel it.
Round Up
Looking at some extra funds in the budget? Round up! If your monthly minimum payment is say $325, you could round up to $350. After 12 months your extra payments will shave off $300 from your principal balance. Almost an entire extra payment! No matter how much you round up, you’ll be making progress.
Extra Payment
By dividing your monthly payment by 12 and adding that to your monthly minimum, you’ve just made an extra payment over a year. Using the example above, a $325 minimum payment spread out over 12 months equals a new monthly payment of $352.08. How easy was that?
Additional Income
Any extra income coming in should be applied towards your balance. Maybe it’s from a part-time job, unexpected tax refund, or your annual garage sale. This may even become an incentive to start selling household goods that are collecting dust in the garage on Ebay or CraigsList.
Refinance Your Credit Union Auto Loan
Perhaps the easiest way to save money on your auto loan is to refinance. Dane County Credit Union offers some of the most competitive auto loan rates around compared to Madison area banks. Save over the life of the loan by refinancing a lower interest rate, then save even more with bi-weekly payments, rounding up, and allocating additional income.
Next Steps
With the car paid off, what will be your next goal? Maybe adding to the mortgage payment, or adding to your retirement savings, or planning more weekend getaways! While these steps may seem simple, you can be confident of making steady progress towards your financial goals.
