Time for a car loan health check?
If you’ve had your car loan for a year or more, you might be ready for a review. Regularly taking a closer look at your loan could save you money and speed up the time it takes to pay it off. Let’s take a look at five simple ways to review your car loan.
1. Could you pay a little more?
It’s possible that you erred on the side of caution when you set up your car loan. If you were pessimistic with your budget you may have since discovered you have a few more dollars to play with. Now’s a great time to contact your provider and ask if you could add those dollars to your repayments. The result could be lower interest costs and getting rid of your loan faster.
2. Is it possible to make a more frequent payment?
When you set up your car loan you may have chosen to opt for standard monthly repayments. Now that you’re a year down the line, perhaps you realise it would be easier to align your repayments with your salary?
If you receive weekly or fortnightly salary payments, why not see if you can move your car loan repayments to match? Moving from monthly to fortnightly would result in making one full additional payment in a calendar year. That’s a smart way to speed up paying your car loan off.
3. Why not make a one off payment?
If you’ve got money in the bank you may be enjoying thinking about what you could spend it on. One option is to pay a lump sum onto your car loan. If your car loan agreement allows for this, it’s a great way to bring down your balance and fast-forward to the date of that final payment.
4. Try not to skip payments
It’s not uncommon for some providers to offer payment breaks once you’ve been paying off your car loan for a while. Payment breaks are a valuable tool if you find yourself short of cash and at risk of missing a payment. It’s important to protect your credit record and avoid going into arrears.
However, if you’re considering going shopping as an alternative to making a payment: think carefully. Payment breaks ultimately end up costing you more in interest and pushing back your final payment date. Try to make your regular payments if you can.
5. Is it worth refinancing?
Even if you’re happy with your provider, 12 months into your car loan is a great time to take a look at the market and be aware of your options. Refinancing could be the right solution if you’re looking for lower interest rates; the opportunity to increase the value of your repayments; or lump sum payment options.
Having a look around can let you know what’s available with other providers. If you’re thinking of moving, have a chat with your existing finance company first. It’s a good idea to check you understand the terms of your car loan before considering a move. You may find out there’s no need to move after all.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure the content is correct, the information provided is subject to continuous change. Please use your discretion and seek independent guidance before making any decisions based on the information provided in this article.