How to Quickly Pay Off Your Auto Loan

If you want know how to quickly pay off your auto loan(s), whether or not you already have vehicles, you are in the right place!

Let’s Make Your Big Purchases Even More Worth It

In my previous post about how to quickly pay off your mortgage, we talked about how to decide if you even need to pay off these loans more quickly, if you are investing. So, go ahead and check that post out first to get an idea if you are maximixing your budget before we continue with going over how to quickly pay off your auto loan.

If you feel like you are farrrrrrr off from even thinking of purchasing any vehicles, you still want to do today’s challenge. It is very likely you will want to purchase a vehicle or two in the future. So, being aware of how much you will need in order to make this purchase, how auto loans work, and how to pay them faster will set you up for success when the time comes. Making big financial goals even when they seem impossible, though it may sound counterproductive, is the best motivation for getting through the rougher parts of your journey to financial freedom. As you make sacrifices through the debt payoff phase, they will feel much more worth it as you look forward to accomplishing bigger financial goals like purchasing a vehicle.

So, if you haven’t already, I highly suggest listing your financial goals first. We covered personal financial goals you must make for yourself in your lifetime here, for your marriage here, and for your children here. After listing your lifetime goals, we can determine which of those goals we can accomplish this year. We also covered how to maximize your income here. And, we covered how to begin to set up a budget here. If you haven’t downloaded your free budget template yet, you can do so here now and create a budget for this entire year!

Today, you will also download my mortgage and auto loan calculator here so we can play with some numbers and figure out how to quickly pay off your auto loan!

If you have any auto loans, note the following numbers on the first tab of the Mortgage & Auto loans calculator spreadsheet as indicated:

• If you have any auto loans, note the current principal balance on each vehicle in the cells highlighted in orange.
• What is your annual interest rate? Note the percentages in the cells highlighted in green. Do not add the percentage sign. For example, if your loan rate is 4.38%, just enter the number as 4.38.
• Note the number of payments you have remaining in the cells highlighted in blue. We talked about how to obtain your remaining number of payments here.
• Note your monthly payment due in the cells highlighted in purple.

If you do not plan to purchase any vehicles, skip down to how to pay off your vehicles faster.

If you are in the market for a new vehicle, check Kelley Blue Book for a vehicle you desire. Go to your bank’s website and check their current auto loan rates.

Now, go to the second tab on the Mortgage & Auto loans calculator spreadsheet and enter the following numbers as indicated:

• Note the auto loan total for your desired vehicle in the cell highlighted in orange.
• Note the current loan rate percentages in the cells highlighted in green. Do not add the percentage sign. For example, if your loan rate is 4.38%, just enter the number as 4.38.
• Note the total number of payments for the term of your loan (i.e. a 4-year auto loan would require 48 payments) in the cells highlighted in blue.
• Your monthly payments will be calculated for you.

How to Pay Off Your Auto Loans More Quickly

Now, it’s time to have some fun! Take a look at the “Accumulated Interest” totals noted in the top section of each loan. This is the total interest that will be paid in addition to your principal loan. Isn’t it mind-blowing how much interest accumulates? Now, let’s play around with how this interest total will change if you paid more than your minimum monthly payment on each loan. Imagine you can afford to pay $300 more toward your auto loan every month. Enter $300 in the cell highlighted in red. Now, look at the interest total again. What a difference in paying your auto loan off more quickly, right? Now, scroll all the way down until the minimum payment column is zero. Notice how much more quickly you can pay off your mortgage loan than the original 48 months? Now, select undo (or hold down Ctrl + Z together and release), and go ahead and play around entering different additional payment amounts in the cells highlighted in red. Even entering a small amount can make a difference. Try it! Enter $5 and see what happens. It really puts into perspective how every penny really counts!

I will be showing you how auto loan payments will be calculated more precisely into your actual budget by the end of this challenge. An even bigger goal to strive for is to be able to purchase your vehicles in cash. It’s totally possible to do that and I will show you how. To get an idea of budgeting tasks you must be completing on a regular basis, check this video out:

In order to know how to begin to create a budget and how to truly maximize your income and accomplish your financial goals, you must create a budget for your income now in order to use it in the most profitable way possible. So, if you haven’t downloaded your free budget template yet, you can do so here now and create a budget for this entire year!

Remember, after you create your budget for this year, I show you how it all comes together in a comprehensive lifetime budget that takes minutes a day to maintain.

In the next post, we will calculate how to quickly pay off your credit card and student loan debt.

Happy Budgeting!