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How to Pay Off You Car Years Early


Having a car payment sucks. You dish out several hundred dollars a month for 60 or more months. That’s five years of being in debt. Five years of not actually owning your car.

Not to mention the interest rate, which makes you pay more than the vehicle is worth.

Paying off your car years early will help you be debt-free and save you a ton of money.

Here is what I did to pay off a $36,000 vehicle in less than four years.

Disclaimer: My mindset on finances and buying cars has completely changed since my last purchase. I no longer believe in spending the amount I did back then. But, I learned from my mistakes and continue to stay educated today.

Make it Your Only Debt

If you are already in debt you don’t need to add to it.

Paying off one line of debt is much easier than balancing several.

Sometimes this isn’t practical and you need a vehicle ASAP. Pay off as much of your other debt as possible before digging the hole deeper with a monthly car payment.

Make sure your interest rate is lower than your other forms of debt. For example, if you have student loans at a 6% interest rate, then you want your vehicle APR 4% or lower.

Be Willing to Compromise

Face it, you probably won’t be able to afford your dream car. Some features aren’t worth the extra $200 added to the price tag.

Be honest with yourself and choose a car that fits your needs before your wants.

What you can afford today, you may not be able to afford tomorrow.

What that means:

  • Pick a car based on what you can afford if you were to hit a financial brick wall. This will get you a cheaper vehicle and make sure you can keep it during a financial emergency.
  • Added features are nice but they add to the sticker price, which adds to the amount you pay in the long run.
  • Having a low monthly payment doesn’t help if you take out an eight-year loan. It is difficult to know where you will be financially several years later.
Big Down Payment

I knew years ahead what vehicle I wanted and saved up $10,000 as a down payment.

Doing this will keep your monthly payments down and shorten the length of the loan.

You can also get a lower interest rate, depending on your personal credit history.

Since cars typically lose their value, a big down payment can keep you from owing more than what the car is worth.

It can be scary to spend that amount of money on one purchase.

I had an awful pain in the pit of my stomach when I handed over that check. But, it did help me pay off the vehicle early.

Pay Extra on Monthly Installments

Round up every month on your payments. For instance, if your payments are $380, pay $400. You won’t miss the extra $20.

If you find yourself with extra spending money put it towards your car payment.

Start a side hustle and use your earnings to pay off that car debt. Even if it’s a small amount, every little bit helps.

It’s not fun having to put your entire Christmas bonus towards a car payment but remember: The quicker you pay it off, the quicker you will be debt-free.

Paying extra when you can, also helps for when you cannot.

Life happens and you may not be able to pay an extra $50 to $100 a month towards your car debt.

But since you’ve already been making extra payments, it’ll be okay to pay the minimum for one or two months until you get back on your feet. Always pay the minimum amount and never skip a payment.


If you have a high-interest rate you can lower it after a few months of payments by refinancing. Even if it’s not that high, you could still try lowering it and save some more money.

Usually, after four to six months of payments, you will be able to refinance the vehicle.

This shows the banks you are reliable and they will be able to offer you a lower interest rate.

Paying less interest saves you a ton of money. Interest rates are a necessary evil when getting a loan but you need to get them as low as possible.

Use Your Tax Return

Use your tax return to pay off your car-debt or any debt for that matter.

This really helped me to pay off my car early. I would put 50% to 75% of my tax return towards the car payment and would watch that debt go down instantly.

If you can’t put all of your tax return towards your car payment, set a minimum. Either 50% or 25%, but make some contribution to the car payment.

Not everyone gets money back at the end of the year. If you don’t you can use other streams of random income:

  • Bonuses from work.
  • Gifted money from family members.
  • Cashback reward programs.
  • Promotion differences. (If you get a $2 raise, automatically put it towards your vehicle debt, you’ll never miss it).
Get Rid of Your Car Payment Now

Any of these methods will help pay off your car ahead of time.

Be realistic about your wants and needs and adjust accordingly.

Pick a car that fits your current financial situation and put it in place right now.

Stay disciplined and keep your priorities in check. Being in debt is not financially smart and you need to do everything you can to get out of it and stay out of it.

Why pay more than what the car is worth?

So take the challenge and pay off your car years early.

Instead of going out to dinner tonight, make a grilled cheese and transfer $50 to your car payment right now and be debt-free.

This is what worked for me personally. Everyone’s financial situation is different, so these methods may not work for everyone. I want to help provide financial knowledge I had to learn the hard way. Please continue to educate yourself on your personal finances and keep saving.


This story was originally published by Rhiannon Skelton,

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