Here’s how to get rid of that debt sooner than expected.
- Auto loan repayments can strain your budget.
- With the right approach, you can make yours disappear sooner.
- It is important to reduce your expenses or increase your income to pay off your debts sooner.
Owning a car can be an expensive prospect. Between auto insurance, maintenance, and gas, you could be spending a lot of money just to be able to get from place to place. This is especially true if you don’t own your vehicle and are still making payments on a car loan.
In fact, you might want to pay off your car sooner than expected and free up that money. If that’s your goal, here’s how to achieve it.
Step 1: Set a budget
You may have $2,000 left on your car loan. Or maybe your balance is twice as large. Anyway, to repay this loan early, you will have to free up some money. And putting yourself on a budget is a good way to get there.
You can set up a budget using a spreadsheet or notebook if you want to keep it simple, and from there list your various expenses and what they are costing you. Or, you can play around with different budgeting apps, which you might find more useful because they actually sync with your bank and credit card accounts and categorize purchases for you.
Once you have your budget, you should have a better idea of where your money is going month to month. And that will lead to our next step.
Step 2: Identify expenses to reduce
Once you’ve got your expenses under control, you’ll need to plan to reduce some of them to free up money for your car loan balance. To that end, you have choices. You can choose to cut one big expense, or you can decide to cut a bunch of smaller ones.
Let’s say your goal is to put an extra $300 a month into your car loan to pay it off sooner. If you’re currently spending $250 a month on restaurant meals and entertainment, you may decide to stay home for a few months and free up some cash. Or, you can decide to cancel your $100 cable plan, $50 gym membership, $80 subscription box, and $20 streaming service to get that same total.
Step 3: Increase your income with side work
You may only have a limited number of things in your budget that you are willing or able to reduce. If so, a side hustle could be your ticket to paying for your car early.
There are many gigs you can consider getting these days. If you want flexibility, try to land a job that you can do at your own pace from home, like content editing or website design. If you are able to commit to a set schedule, see if any local shops or restaurants need extra help on evenings and weekends. And of course, you can use your car itself as a source of income by driving for a ride-sharing service.
Being in debt is no fun, even if it’s for a good reason, like having a car. If you’re tired of having to make auto loan payments month after month, follow these steps to get rid of that debt as soon as possible.
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