Do you have a car loan? If so, welcome to the (big) club! – Americans owe a collective $1.3 trillion in auto loan debt. Yikes!

If you’re like most others, you’re probably wondering how you can pay your loan off faster. Below are some strategies, tips, and tricks to help you get to the finish line sooner rather than later. The best thing is, you can start on all the below right away!


  1. See if there’s a prepayment penalty – Some lenders disincentivize early payoff (because they want the interest) by including this penalty in your loan terms. If yours includes this, you’ll need to do some calculations comparing which method will be wiser: pay off early with the penalty or pay off over time as normal (with the interest).


  1. Consider refinancing – If your loan has a high-interest rate, shop around for other loan options. These could include your bank, a different bank, a credit union or even a credit card with a good transfer option. If your credit score has improved since your original loan, you’ll probably be able to get a better deal. Go for a shorter loan term rather than a long one – the goal is to pay it off quickly.


  1. Round up – This is an easy and relatively painless way to start knocking down the debt when your budget doesn’t have a ton of wiggle room. The idea is to round up your regular payments as much as you can afford. If your payments are $350, round up to $400. Over time, those extra dollars add up.


  1. Cancel the extras – When you first took out your loan (especially if you did so through a dealership), you may have added on some extras such as service contracts, GAP (or Guaranteed Asset Protection) waivers, extended warranties, service contracts or warranties for tires and wheels. Unless these are truly useful, consider canceling them.


  1. Make bi-weekly payments – If you usually pay monthly, you can play a mental trick on yourself to make a good dent on your loan. Split your normal monthly payment in half and make that payment every two weeks.


  1. Use a windfall – Windfalls are an excellent strategy to pay off debt, invest, make IRA contributions or enable purchases that seem out of reach. If your car loan is priority, use any unexpected influx – from a tax return, work bonus, cash gift, etc. – and put a chunk down on your loan. Check to make sure any extra payment you send will go to reducing the principal, instead of toward interest or other fees.


  1. Start a side hustle – This could be short-term or temporary, but earning extra income is a great way to pay off part or all of your loan balance in a fairly short amount of time. Even just a few weeks or months could do the trick.


  1. Consider selling your car – If you owe a lot on your vehicle or circumstances (such as financial, family or commute) have changed significantly, you may want to consider selling your vehicle and getting a more affordable one instead.


  1. Pare down expenses – A great rule for ongoing financial health is to do regular budget checks. If you haven’t done so in a while, check out our guide and see where you can free up cash to put towards paying off your loan.


  1. Snowball your payments – “Snowballing” is a debt paydown strategy that goes like this. First, rank your loans/debts from lowest to highest. Then, focus on the smallest loan, paying it off as quickly as possible while making the minimum payments on the rest. Once it’s paid off (and after you’ve done a happy dance), start the process again, using the “extra” money you would have been paying to that first loan and applying it to the next.


If you’ve read this far, congrats on taking the first step to pay your loan off faster! Your two most important tools in reaching your goal are having a plan and having the discipline to execute on it. These actions will not only get you your pink slip faster but also decrease the amount of interest you’ll pay over the life of the loan. Get started today – you can do it!



This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or

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