Car title loans are a great way to get fast cash when you need it. However, if not managed correctly, they can quickly become a burden. Just like other loans, you’ll want to pay off your car title loan as soon as possible to avoid paying unnecessary interest and fees. That means having a realistic repayment plan and sticking to it.
Most title loans have a shorter repayment period, so only borrow what you can afford to repay within the specified time frame. Then follow these few tips to pay off your car title loan quickly:
1. Ensure You’re Making All Payments on Time
This may seem like a no-brainer, but making all of your payments on time is important. Late or missed payments can result in additional fees and will likely extend the life of your loan, costing you more money in the long run. Therefore, if you’re serious about paying off your car title loan without delay, be sure to always pay on due time.
Auto title loans have high-interest rates – often as high as 300% APR. The average auto title loan borrower pays approximately $1,200 in loan fees for a $1,000 loan, so it’s important to try to pay off your loan as per the original terms to avoid getting yourself deeper in debt.
2. Make Weekly or Biweekly Payments
One of the best ways to pay off your car title loan quickly is to make weekly or biweekly payments instead of monthly payments. By doing this, you’ll make one extra payment or more per payment period, which can help you pay off your loan faster. Just be sure to let your lender know that you’ll be making additional payments so they can adjust your repayment schedule accordingly.
Some lenders may charge a prepayment fee if you pay off your loan early, so be sure to ask about this before making additional payments. In fact, this is a question you should ask initially, even before taking out the loan, to avoid any unwanted surprises later on. Understanding the terms of your loan is critical to ensure you’re not inadvertently paying more than you need to.
3. Round up Your Payments To Pay More Each Month
If making additional payments isn’t possible, another option is to round up your payments each month. For example, if your monthly payment is $257, you could round it up to $300. This extra amount may not seem like much, but it will go towards your loan’s principal and can add up over time and help you get out of debt sooner.
Look at every small additional payment as an investment in your future. Every little bit helps, and the sooner you can pay off your loan, the better. Again, let your lender know that you’ll be rounding up your payments. Most reputable lenders will be happy to work with you to ensure you can repay your loan in a timely manner.
4. Make a Lump Sum Payment When You Can
If you receive a windfall, such as a bonus at work or tax refund, consider using it to make a lump sum payment on your car title loan. Making a large payment can help reduce the overall amount of interest you’ll pay on your loan and help you get out of debt sooner. Of course, you don’t have to make a lump sum payment – you can use the money for other purposes if needed.
If you can also think of some extra sources of income – such as picking up a part-time job or selling some of your belongings you no longer need at local thrift shops, you can use that money to make additional payments on your loan.
Don’t Forget To Reevaluate Your Budget
Remember to reevaluate your budget when paying off your car title loan, as well. Just because you’re making progress on paying off the loan doesn’t mean you should afford to let your guard down. Be sure to keep track of your expenses, both big and small. This will help secure that you’re still on track to pay off the loan as early as possible.