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Debt Pay Off

How to make double payments on your car to pay it off faster

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You’ve heard that making double payments on your car can help pay it off sooner. But is that really true? In this article, we explain how double payments work and whether they’re a good idea for you.

Make double payments on your car.

Making double payments on your auto loan is an effective way to pay off your car more quickly. While it’s true that making double payments will reduce the amount of interest you pay over time, it can also increase your monthly payment and total cost of ownership.

Make sure that this strategy fits into your budget before deciding to make extra payments each month.

Double payments can be an effective way to pay off your car more quickly.

Double payments are a great way to pay off your car more quickly and save money on interest. By making an extra payment each month, you can reduce the amount of time and money spent on paying off your loan.

For example, if you have a five-year loan with an annual percentage rate (APR) of 5% and make monthly payments of $300 per month ($3,600 total), it will take approximately 20 months to pay off that loan. But if instead you made double payments–two times as much each month–in just 15 months (a total of 30), then!

Higher payment vs early payoff

Keep in mind that making double payments on your auto loan can increase your monthly payment and the total amount you pay in interest.

When you make double payments on your auto loan, the balance of the loan decreases more quickly. This means that you will have more money to invest in other things. However, it’s important to keep in mind that making double payments on your auto loan can increase your monthly payment and the total amount you pay in interest.

A fixed interest rate loan

If you are paying a fixed-interest rate, then making extra payments can save you money in the long run.

A fixed-interest rate means that your interest rate will not change over time. For example, if you have a loan with an 8% annual percentage rate (APR), but only pay the minimum payment every month, then it would take years longer to pay off your debt because of compound interest. Making double payments each month can help reduce this extra time and save money on interest charges by paying off loans sooner than expected.

An ARM (adjustable-rate loan)

However, if you have an adjustable-rate loan (ARM), then making extra payments will not necessarily save you money in the long run because they will be added to your principal balance at the end of the month, making the balance bigger than it was before.

However, if you have an adjustable-rate loan (ARM), then making extra payments will not necessarily save you money in the long run because they will be added to your principal balance at the end of the month, making the balance bigger than it was before.

The only way that this can work is if: 1) You have enough extra cash on hand and 2) Your interest rate stays low enough for several years so that making double payments won’t increase your total interest cost by more than what was saved by paying off early.

This means that each month’s payment will be slightly higher than it would have been if you hadn’t made an extra payment, so payback time is extended as well as increasing your interest costs.

As with any debt, it is important to understand how your loan works. The more you know about the terms of your car loan, the more likely it is that you will be able to make smart decisions about how much money should go toward principal versus interest in each monthly payment.

The best way for consumers to get an idea of whether or not they should make double payments on their car loans is by calculating how much extra money would need to be paid each month in order for them not only pay off their current balance but also leave some extra cash at the end of a term (about 20%).

Making double payments does not always save money

While making double payments on your car loan may be a great way to save money and pay off your debt faster, it’s not always the best idea. If you have an adjustable-rate mortgage (ARM), then making extra payments will not necessarily save you money in the long run because they will be added to your principal balance at the end of the month, making the balance bigger than it was before.

This means that any interest savings from those extra payments could be offset by higher interest rates later on down the line when they kick in.

Bottom line

If you are paying a fixed-interest rate, then making extra payments can save you money in the long run.

However, if you have an adjustable-rate loan (ARM), then making extra payments will not necessarily save money in the long run because they will be added to your principal balance at the end of the month, making the balance bigger than it was before.

This means that each month’s payment will be slightly higher than it would have been if you hadn’t made an extra payment, so payback time is extended as well as increasing your interest costs.

How to Pay Off Debt Fast With Low Income

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How to Pay Off Your Debt FastDebt is a serious problem. And if you master this top money skill, you can live rich in more ways than you think. Interested to learn how to pay off debt fast with a low income? Keep reading.

According to a recent Gallup survey  the average American has 3.7 credit cards with a whopping 71% of us having at least one card.

Furthermore, according to a survey by Bankrate.com  a shocking 32% of us say we live paycheck to paycheck, and that staying current or getting caught up on bills is our main financial concern.

In uncertain economic times like these, we need a plan and we need it fast.

Here are a couple quick reasons why you pay your debt off with a low income as quickly as possible.  

Don’t like mine?

Get a paper out right now and make your own. Write out your personal why.

Ways to Crush Your Debt on a Low Income

Paying off your debt is in within reach, regardless of your income. Here are some ideas to try.

Increase Your Credit Score

Reducing your balance-to-limit ratio on your credit cards can increase your credit score.

Your credit utilization should be no more than 30% but the lower the better!

Paying off your cards each month is ideal.

For expert help with your credit, I recommend Lexington Law.

I have friends and family that used them with amazing results. They have multiple plans available and they help you track your credit monthly, crush credit errors, dispute items on your credit, increase your credit score, and more.

Highly recommended.

More Financial Security

Having no debt leads to greater financial security.

Monthly payments tie up a good portion of your expendable income. You could be spending the extra money on things you want instead of just things you need.  You could be saving for college, retirement, or a down payment for a house or car. You could begin building wealth by making smart investments.

No amount is too small.

Now that you’ve got ample motivation to get started eliminating your debt how are you going to do it?

Get out the paper you wrote you’re the reasons you want to get out of debt and now add the part about how you’re going to get that accomplished.

It’s been proven that if you write down your financial plans and goals you are more likely to reach them. Let’s get started!

Review Your Budget

Find ANY area you can cut back. I would strip back that budget to what Finance Guru, Dave Ramsey, calls “beans and rice”. You get the idea?

Strip back your budget to the items you have to pay, and get the expendables to as little as you can.

Cut out and turn off ALL non-essential-to-life items. These would be the “wants” like cable, manicures, dinners out, vacations, etc.

List Your Debts

All of them! It doesn’t matter if it’s a $3 library fee, or a $10 loan from Mom or even a $20,000 car loan write them down from lowest to highest.  Note: for the purpose of this exercise we are only dealing with consumer debt in this article- do not include your mortgage at this point.

Take all of the money that you have from stripping back your budget to essentials and start putting it towards your lowest (dollar amount) debt paying the minimum only on the rest.

Paying off your littlest debt first will give you a sense of immediate freedom.  Once that debt is paid off take the increased money you now have and apply to your next biggest debt. It’s called “Snowballing” and it works well.

The snowball gets bigger as it rolls. In the same way, the more funds that become freed up, the more you will be able to add to the next debt and so on.

Make a Plan

Plan out (on a calendar) how long it will take you to pay off each debt. Build in little incentives in your budget for each debt paid off, (or if you have a lot of debt, or will take a long time, celebrate ¼ milestones, or ½ milestones on debts). 

It will help you to see progress. Don’t go crazy though.  Only use $10, or $50 (whatever is reasonable) of your snowball debt money to treat your family (maybe dinner, maybe more grocery money, a movie, etc.) when you have hit a goal. 

Your family will be sacrificing for a period of time so it’s good to reward them for short-term goals to keep the long goal in view.

Look for Extra Money for How to Pay Off Debt Fast on a Low Income

Find ways to add more money to help your snowball grow so you can pay off your debt sooner.

Have a yard sale, get a paper route, or deliver pizza, or start an Etsy shop (don’t spend a lot of money on supplies, etc.) to sell your hobby, or start with a direct sales business for a season (one that doesn’t require a huge investment- do your homework!) or _________.

Figure it out! You can do this!

I hope you found this article on how to pay off debt fast on a low income inspiring. This is within reach for you!

With dedication, hard work, and sacrifice, you can get out of debt- quick! And then work a plan to stay that way.

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How to Pay Off Your Debt Fast

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