Zero2Turbo
    Facebook Twitter Instagram
    Facebook Twitter Instagram RSS
    Zero2Turbo
    • Home
    • Contact
    • Videos
      Featured

      BMW M2 vs Audi RS3 Performance Drag Race Is Seriously Tight

      By Zero2TurboSeptember 15, 2023
      Recent

      BMW M2 vs Audi RS3 Performance Drag Race Is Seriously Tight

      September 15, 2023

      Lamborghini Huracán Sterrato Does Huge Off-Road Jump

      September 13, 2023

      Porsche 911 GT3 RS vs BMW M3 CS Drag Race Shows Effect of DRS

      August 31, 2023
    • South Africa
    • Zero2Turbo Telegram
    Zero2Turbo
    Home»Zero2Turbo»Are There Any Benefits of Paying Your Car Loan Early?
    Zero2Turbo

    Are There Any Benefits of Paying Your Car Loan Early?

    By Zero2TurboAugust 27, 2018Updated:September 4, 2018No Comments
    Facebook Email Twitter LinkedIn Telegram WhatsApp
    Share
    Facebook Email Twitter LinkedIn WhatsApp Telegram

    Clearing your car loan early is an excellent financial goal and it can help improve your credit scores and make you financially flexible. However, this calls for outstanding discipline and commitment. Most people look at the amount of money they pay every month and realize how much they can free up if the debt is settled within a short time. Whether this is the most appropriate decision to make depends on several factors. If you have been contemplating whether you should repay the auto loan early, this article looks into a few things you should think about and make an informed decision.  

    Save money on the interest charged

    The interests charges for a loan you took to purchase a car can build up rapidly. But you can save some cash if you pay the principal early. By making regular payments towards the loan, you can lower the amount you pay interest since the principal amount decreases with every payment. Once you have cleared the principal, the interests stop building up.

    For instance, if you pay the loan one year earlier than you agreed, you will end up saving the interest amount you would have been charged for that year. Depending on your loan, you can save several thousand but you may want to pay in as early as two years than the agreed time.

    Lower the insurance cost

    After clearing the car loan, you can change your insurance coverage. When you have acquired the car through an auto loan financing, most lenders will want you to go for full insurance coverage. But after you repay the loan, you are free to take other options.

    You might want to retain your current plan considering that insurance providers will repair the vehicle if it’s damaged. On the other hand, you can eliminate collision coverage. This is what you need just in case you crash the car and the fault lies with you. While it can be beneficial if another motorist damages your vehicle when it’s in a parking lot, this is also quite expensive.  You should evaluate your situation to see the possibility of causing an accident, the cost of the insurance coverage, and the current value of the car.

    You may also remove the comprehensive insurance cover. This coverage guards your vehicle against theft, fire, vandalism, and weather among others. The downside is that you won’t have coverage for physical damage on the car. Nevertheless, you can save money on insurance costs.

    When you should pay early

    Having a huge emergency fund requires outstanding discipline to save more money. If you already conquered your spending habits, you might consider using some of this money to deal with the car loan. This means that you will enjoy financial freedom and you can embark on saving more money to buy your next vehicle.  

    Paying nation 21 loans within a short time shows that you are concerned about your scores and it helps you get better credit scores. Your debt to income ratio is critical to your financial profile and it has a significant influence on credit purchases you may want to make in future.  This is because a lender will consider your debt to income ratio before approving your request to borrow.

    If you managed to refinance the car loan and got a better deal, you are in a better position to pay the loan early. For instance, if the initial loan came with 5% interest but you now have refinanced deal offering you about 2% interest, you can quickly clear the entire loan before its time.

    When not to pay early

    If you have a limited budget due to low income, student loans, and mortgage loans, you shouldn’t stretch your finances further just because you want to clear this loan early. This is important especially if the car loan has better interest rates compared to other debts weighing you down. Otherwise, straining to pay the loan quickly can drive you further into debt.

    Most of the car lenders you find will impose fees and penalties to any borrower who wants to pay the money earlier than agreed. They do this to recover the money lost in the form of interest for the remaining period.

    In the long run, paying the auto loan quickly boils down to your financial situation and it can be very unique. If you don’t like walking around with debt, making faster payments can help you have a peace of mind. but from a higher perspective, moving quickly to eliminate the debt will make more sense if you can take the money and use it for something that improves your net worth. For instance, you may invest in good stocks that will gain value quickly or you can eliminate a debt that can cost more in the long run.

    Final words

    If you want to settle the loan quickly and you are certain there won’t be any hindrances in your way, this can be a good decision. It can benefit your finances in that you have more funds to save for another vehicle or any long-term investment goal.

    But if this is a challenging undertaking given your circumstances and the benefits are minimal, you might want to stick to the original plan. But most importantly, always make sure you have a plan to clear the balance within the stipulated time. in addition, you should take your time to shop around for an auto loan to make sure you are getting the best deal.   

    Share. Facebook Email Twitter LinkedIn WhatsApp Telegram
    Previous ArticleThis 1962 Ferrari 250 GTO Smashed The Auction Record With Almost R700 Million Price Tag
    Next Article The R80 Million Bugatti Divo Is Official And Sold Out

    Related Posts

    ‘Alfa Romeo 4E’ Planned As EV 4C Successor

    September 27, 2023

    998 HP Aston Martin Valhalla Revealed In Road-Going Spec

    September 27, 2023

    Non-Competition BMW M Models Will Be A Thing Of The Past

    September 26, 2023

    Toyota GR Yaris To Get Update With 300 HP and Eight-Speed Auto

    September 26, 2023

    Novitec Reveals Highly Limited N-Largo S Kit For Ferrari 812 Superfast

    September 26, 2023

    Mercedes G-Wagon Production Coming To An End With Updated Model To Be More Aerodynamic

    September 21, 2023

    Leave A Reply Cancel Reply

    Popular Posts
    • ‘Alfa Romeo 4E’ Planned As EV 4C Successor
    • 998 HP Aston Martin Valhalla Revealed In Road-Going Spec
    • Non-Competition BMW M Models Will Be A Thing Of The Past
    • Toyota GR Yaris To Get Update With 300 HP and Eight-Speed Auto
    • Novitec Reveals Highly Limited N-Largo S Kit For Ferrari 812 Superfast

    Latest Instagram Photos
    • Looks like the new Mercedes-AMG S 63 E PERFORMANCE was spotted testing in South Africa 🇿🇦

That start-up sounds pretty damn promising!

This thing packs a whopping 791 hp (590 kW) and 1,430 Nm of torque.

📌 Graskop, Mpumalanga

🎥 @guylin_
    • Look what’s arrived in South Africa 🇿🇦 

Nothing confirmed by Toyota SA as of yet but here is the 224 kW GR Corolla!

Image source: @average_midship 

#ExoticSpotSA #Zero2Turbo #SouthAfrica #Toyota #GRCorolla
    • We waited a fair bit for the Tiguan R to arrive but that means it has been given enough thought and executed with the sort of German precision that makes us happy to have waited.

As fast SUVs go it’s a cracker, and with a price tag starting from R1,014,900 it is actually decent value in the segment.

It’s fun, aggressive when you want it to be and remarkably civilised when you don’t. Cars like this rarely make sense, but the Tiguan R is one case where that argument starts to change one's mind.

We cannot wait to drive the matching Golf next week!

#ExoticSpotSA #Zero2Turbo #SouthAfrica #Z2TDriven #VolkswagenTiguanR #TiguanR #VWTiguanR
    • The very first SA-spec BMW M2 snapped at BMW HQ in Midrand.

Zandvoort Blue would not be our choice but the looks have certainly grown on us. What about all of you?

Shots via @projectthart 

#ExoticSpotSA #Zero2Turbo #SouthAfrica #BMWM2 #NewM2 #ZandvoortBlue
    • If you’re expecting a faster, angrier and more focused version of the original 86, you’re going to be happy with this car.

Toyota finally gave the 86 more power. It’s not take-your-breath-away power, but again, it’s not made to win drag races. If you want more power, get a Supra.

Sure it is a bit more pricey this time around but it is a no-regrets kind of car that you will enjoy just as much today as 10 years from now.

Long live the manual transmission, especially when it’s packaged within something as fun as the Toyota GR86.

#ExoticSpotSA #Zero2Turbo #SouthAfrica #Z2TDriven #ToyotaGR86 #GR86 #Anime #InitialD
    • Stunning Jaguar F-Type Project 7 spotted in sunny Cape Town yesterday by @ryan_6r 😎

Just 5 of these made their way into SA making this quite a rare sighting!

#ExoticSpotSA #Zero2Turbo #SouthAfrica #Jaguar #FTypeProject7 #Project7 #JaguarFType #CapeTown

    Follow Us

    Facebook Twitter Instagram YouTube RSS
    Designed by Zero2Turbo.

    Type above and press Enter to search. Press Esc to cancel.