Historically, car loan terms typically ranged from three to five years; however, in 2020, the average term for a new car loan was about 72 months or six years. It’s not hard to see why so many borrowers are opting for car loans with longer terms. The longer the term, the lower the monthly payment.

Even though the monthly payment is lower, choosing a car loan with a longer term can actually cost you more money in the long run. This is because you may pay more in interest over the course of a long-term car loan. 

If you want to save money, the best thing you can do is pay your car loan off as quickly as possible. The sooner you pay off your loan, the more likely you will pay less in interest. Here’s how to pay off your car loan faster:

Round Up

Most people simply make the minimum required payment on their car loan every month. For example, if their car loan monthly payment is $315, they only pay $315 every month. However, if you want to pay off your car loan as quickly as possible, it’s wise to round up your monthly payments.

Try rounding up to the nearest $50 whenever you make a payment. Instead of paying $315, for instance, pay $350 every month. You’re only paying an extra $35 per month, so it shouldn’t eat into your budget too much. But even though it’s a small amount, doing this every month will help you pay your loan off much faster so you can save money on interest.

If you have more room in your budget, consider rounding up to the nearest $100 instead. This will help you pay off your car loan even faster.

Use Windfall Money

It’s exciting to unexpectedly get money for your birthday, around the holidays, or as a bonus at work. You may even receive a larger tax refund than you expected or inherit money from a family member. All of these cash payments are examples of windfall money.

If you come into windfall money, you may be tempted to spend it on something fun like a trip, night out with your friends, or a new outfit. However, this money can be better utilized elsewhere. Put any windfall money you receive toward your car loan. Don’t wait until your next payment is due, either. Use your windfall money to make an additional payment on your car loan right away. This will ensure you don’t change your mind and spend your windfall money on something else.

Putting any extra cash you receive throughout the year toward your car loan can help you reach your goal of paying it off faster.

Work A Side Gig

If you can’t afford to allocate more money toward your car loan right now, you may want to consider picking up a side gig to earn more cash. Fortunately, it’s never been easier to find a side gig. Some of the most popular—and lucrative—side gigs include:

●     Rideshare driver

●     Delivery driver

●     Personal assistant

●     Handyman

●     Dog walker

●     Pet sitter

●     Babysitter

●     Tutor

The best part about working a side gig is that you are in control, enabling you to work as little or as much as you want. Side gigs often have flexible hours; therefore, you are able to select work that best fits your schedule.

Once you find a side gig you enjoy, start putting the money you earn aside. Then, put this money toward your car loan at the end of every week or month.

Sell Your Stuff

Selling items you no longer want or need is another way to earn more cash on the side. There are plenty of things you can sell for extra cash, including:

●     Smartphones

●     Video game consoles, TVs, or other electronic devices

●     Clothing that you don’t wear or that no longer fits you

●     Furniture

●     Books

●     Home decor and artwork

Don’t assume that something won’t sell simply because you think it’s outdated or unappealing. Remember, one man’s trash is another man’s treasure. It only takes a few minutes to create an online listing for your belongings, so there’s no harm in posting something that may or may not sell.

Before creating a listing, research how much similar items are selling for, so you know how to price your belongings. This way, you can make as much money as possible to put toward your car loan.

Earn Extra Cash Online

You also have the option of making a little extra money online.

There are countless websites and apps that pay consumers to complete simple tasks. For example, the website UserTesting.com pays consumers to test different websites and provide feedback on the user experience.

Another option is Amazon’s Mechanical Turk, which pays consumers to perform manual, repetitive tasks such as tagging images or transcribing videos. There are even websites that will pay you to complete surveys.

The amount you can earn will vary depending on the website, task, and how much time you are willing to commit. You won’t get rich off of working on these websites, but you can earn extra cash to put toward your car loan payment every month.

Reduce Your Expenses

Reducing your expenses can help you pay off your car loan faster, too. How? Eliminating unnecessary expenses in your budget can leave you with more money that you can put toward your car loan every month.

The best way to identify unnecessary expenses is to keep track of how you spend your money for one month. At the end of the month, review your expenses. You may be surprised to see how much you can eliminate from your budget.

For example, say you get a coffee every morning on your way to work. Spending a few bucks on a coffee may seem insignificant, but it adds up quickly if you are doing it on a daily basis. Eliminate this expense by making your coffee at home instead. Then, put the money you would have spent on coffee toward your car loan.

Cancel Subscriptions

If you want to pay off your car loan quickly, it’s wise to review your subscriptions to see if there are any you no longer want or need. You may be surprised by how much you are actually spending on these services.

The average consumer spends around $238 per month on subscriptions without realizing it. In fact, a recent survey revealed that 84% of people drastically underestimated how much they spend on monthly subscription services. 

Review your current subscriptions. If you see any subscriptions you no longer use, now is the time to cancel your subscription. Then, put the amount you were paying for this subscription toward your car loan every month.

For example, say you are paying $50 per month for a gym membership that you never use. If you cancel this membership, you can now put another $50 toward paying off your car loan every month.

Following one or more of these tips can help you put more money toward your car loan payment every month. By implementing these strategies, you can pay off your car loan in no time!