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How to Pay Off a Car Loan Faster in St. Catharines

How to Pay Off a Car Loan Faster in St. Catharines

If you want to pay off a car loan faster, there are a few ways you can accomplish that goal. Our St. Catharines shares a few tips you can use to pay off your car faster.

 

The first step is to find out if you are able to make pre-payments on your car loan without any penalties.

 

The majority of car loans in St. Catharines do not have any penalties if you repay the loan off before the agreed upon maturity date, but you should always confirm.

 

If there are no prepayment penalties, then you need to look for ways to increase the amount and number of payments you are making.

 

This may require some cutting back on your budget or taking up a second job and applying that income against your car loan.

 

Refinancing your St. Catharines car loan

 

Another way to pay off your car loan sooner, is to refinance it to a lower interest rate. This is a more involved tactic but if you are in a high-interest car loan then this approach could really save you a bundle.

 

To refinance a car loan in St. Catharines, you will need to apply for a brand new loan at a lower interest rate. Thankfully, interest rates are still at all-time lows but in 2022 rates will start to climb.

 

Lenders are more cautious so you need to make sure you have good credit to get the lowest interest rates. If your credit score is 700 or higher, you should have no problems locking down a great interest rate.

 

Residual value for cars

 

The biggest potential hurdle to overcome is the residual value for your car. Your vehicle is being pledged as collateral for the loan but the value of your car may be lower than what you owe on your current loan.

 

This situation is called “negative equity” and it affects most car owners. In the past, you would need to pay the difference out of your pocket in order to secure the loan but that is no longer the case provided you have the right help.

 

To refinance your St. Catharines car loan where you owe more on the car than what it is worth, you will need to go through a local car dealership. The dealership can buy your used car from you at a higher “trade-in” value and then sell you a newer car with a new lower monthly payment.

 

Another option that the local car dealership has available is to add the negative equity to your new loan. So if your car was worth $5,000 and you owed $7,000 the new loan would be for $7,000 but at a lower interest rate. The only way you can get these loans is by going through the dealership and having good credit (good credit means credit score over 680).

 

It would be to your advantage to reach out to these dealerships as soon as you can to explore your options. By reducing the amount of interest being paid, you should be able to pay off a car loan faster and begin enjoying life on your terms.

 

For any questions or concerns, please don't hesitate to contact us here! 

 

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