6 Tricks to Help Pay Off Your Car Loan Ahead of Schedule

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Approximately 44% of American adults currently have an auto loan, which represents a cumulative debt load of more than $1.1 trillion across the country. Average monthly payments for these loans typically range from $350-400 for used vehicles and $525 or so for new vehicles, which is no small amount when you consider the alternative of owning an older car outright with zero monthly payments!

If you want to be freed from your auto loans for good – at least until your next car, if you choose to go the finance route again – then there are plenty of ways you can speed up your payoff timeline and free up a few extra hundred dollars per month in your budget to spend on more valuable expenses or better yet, put into savings.

Some auto lenders charge prepayment penalties for borrowers who pay off their loans earlier than anticipated, but if your lender doesn’t charge any penalties for this (or the auto loan interest is high enough to outweigh the cost of early payment penalties), then here’s what you should do to pay off your car sooner:

Round Up Your Payments

Is your payment a weird amount, like $343.12 or $511.97? If so, consider rounding up your payments to the nearest $10/$20/$50 amount to make real progress on repayments. Instead of paying $343 per month, pretend your minimum payment is $370 per month or even $400 per month. It’s not terribly difficult to pay an extra $20 or $30 per month, it’s easier to factor into a budget, and it helps you pay off your car loan as soon as possible.

Pay Biweekly

If you’re able to change your payment schedule to biweekly instead of monthly, then you’d be effectively making an extra payment each year. Let’s do the math: 52 weeks in a year equates to 26 biweekly payments, which is equal to 13 months’ worth of car loan payments. This may not make a massive difference compared to other methods of early loan payoffs, but it’s still a great strategy for minimizing the amount of interest you end up paying over the life of the loan.

Make an Extra Payment

Another way you can pay off your car loan more quickly is by making a large extra payment at some point during the loan’s duration. Some people choose to pay off their auto loan when they’re close to the end (e.g., within $1,000 of paying it off completely), while others engage in the “snowball method” of debt repayments by allocating as much money as possible to the highest-interest debt (or smallest, easiest-to-payoff debt) to eliminate the loan as soon as you can.

Put Unexpected Windfalls Towards the Auto Loan

Instead of promising yourself you’ll make an extra payment or two at some point over the course of your auto loan, commit to allocating 90-100% of unexpected windfalls towards your auto loan. This could include: raises at work, overtime earnings, holiday bonuses, tax refunds, and other types of “surprise” money that comes your way.

It can feel disheartening in the moment to put that newfound treasure towards debt, but in the long-term, you’ll be incredibly glad you persevered in your personal finance goals and eliminated the car loan instead of splurging on fancy dinners or other non-necessities.

Refinance Your Auto Loan

If you took out an auto loan back when your credit score wasn’t so hot and it has since improved, you might qualify for a lower interest rate. Check with your auto lender to see what refinancing options are available to you – it may just be a 1-2% drop, but this could still save you hundreds of dollars on a five-figure auto loan.

Refinance Your Car with MotoRefi

I really like the team at MotoRefi for auto refinancing as well. MotoRefi has car loan rates as low as 1.49%. They can offer these low rates for car refinance because they work with some of the best local lenders to find the best rates.

The process with MotoRefi is very simple and completely online. You can pre-qualify on their secure, fully online website without even having to get off of the couch. And, you don’t have to give them your social security number to start the loan process and to pre-qualify.

Customers who refinanced their car loans through MotoRefi saved an average of $101.02 per month on their car payments. Wouldn’t it be great to have an extra $100 in your pocket each month?


Get a Side Hustle

Last but not least: get a side hustle to supplement your auto loan payments. If your current income won’t allow for rounding up payments or making extra payments, then your best option is to find ways to boost your income through side gigs.

You can drive for Uber or Lyft (this may speed up the depreciation rate of your car, however), find work on Fiverr, deliver food for UberEATS or PostMates, walk dogs through Rover or Wag! or any other side gigs (there are too many to list here).

Auto loans are typically easier to pay off than other types of loans (e.g., mortgage loan or student loans), but they still require a great deal of diligence to ensure you’re paying as little interest as possible over the 36/48/60/72 months you have the loan.

Even if your lender has prepayment penalties, don’t let this deter you from saving a ton of money on interest by following any/all of the early-payoff tricks we discussed above.

Pay Off Your Car Loan

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