How to Calculate an Early Payoff Date for Car Title Loans

 
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How to Calculate an Early Payoff Date for Car Title Loans

Securing a car title loan is great because it solves one problem – having the necessary funds to cover an unexpected expense. But it also poses a challenge on the part of the loan recipient, and that is being able to meet the loan payment deadline on time.

If you’re keen on keeping your credit rating and credibility spotless, you might even want to target an early payoff date for your car title loan. The good news is that it is absolutely doable. It is something that lenders even encourage if it means restoring your financial standing in the soonest possible time (and will, as a side benefit, frees you up to make another loan if necessary). While the usual variable term lengths that lenders state would be around 12-36 months (depending on the loan amount and reasonable repayment schemes, plus your car’s market value), you can find many ways to complete your payable’s in a shorter amount of time. Here are some tips that will do a lot in calculating for an early payoff of your car title loan.

  1. Formulate the payment schedule that best fits you. While your lender will do its part in giving you your repayment schedule, it doesn’t necessarily mean that you have to follow it to the letter – that is, if you are up to the task of recalculating it to have a shorter payment period. Let’s say that based on your loan amount, car market value, and credit standing your lender presents to you a very manageable repayment schedule that comes out to 24 months. If you find that the monthly payment is very easy to follow (or if you expect a few guaranteed windfalls throughout the payment period, which translates into more funds coming your way), why not recalculate it to come up with the maximum monthly payment that you are confident that you will be able to meet? Even just an extra fifty dollars per month will go a long way in the bigger scheme of things!
  2. Consider rounding up your monthly payments. There is a big chance that your minimum monthly payments will be exact, up to the last cent. What you can do with this amount is round it up to a whole number as a way of adding to the required minimum if you aren’t sure about how much more you should add to shorten the payment period little by little. If, for example, your monthly payment is $172.45, you can round it up to $200 instead. The additional $27.55 might seem like a small amount to add every month, but if you take that amount and multiply it by the number of repayment months you have you’ll find that the result is very significant – enough to shave off even a few months’ worth of payments. The additional benefit of doing this is that you get to save money on the interest rates that go with your loan.
  3. Make sacrifices wherever – and whenever – you can. After securing a car title loan, you probably already have an idea that there will be some cutting back to do while you pay off the amount you loaned. And when we say cutting back, we mean on both the big things and small things. For some people, it may mean cancelling monthly hair treatments or deciding to work out at home instead of at the gym. For others, it could mean sacrificing the daily cappuccino habit or doing without Netflix for the time being. The bottom line is, see where you can cut costs especially if it is deemed a non-essential item. Other doable suggestions include:
    • Less dining at restaurants, more cooking food at home
    • Less meet-ups at the bar with friends, more potluck dinners at someone’s house
    • Less retail therapy, more time getting creative and “shopping your closet” to come up with new outfit ideas with things you already have
    • Fewer Uber trips, more bus rides or other forms of public transportation (or you can just walk to your destination if it’s not so far)

    These money-saving suggestions will definitely add up, resulting in you having the funds to speed up your payment schedule while at the same time being good for your health, relationships, and overall well-being.

  4. Look for opportunities to make more money. Apart from your regular monthly income, you can also find ways to generate the funds that will go towards your repayments. There are many things that you can do to make money on the side, starting with things that you already have or skills that you can monetize, such as:
    • Spending a few months driving for Uber or even Lyft (which means having your collateral actually earn you the money you need to get your car title back)
    • Sign up to become a tester for online stores, video or gaming sites
    • Fill out and submit paid online surveys
    • Rent out a vacation home or even a room in your apartment on Airbnb
    • Make and sell crafts on Etsy
    • Advertise your other skills (ex. graphic design, computer software know-how, events hosting, ballet, etc.) to people who might need your services
    • Have a major yard sale for things you no longer need
    • Put up some big-ticket items (designer bags you no longer use, high-value trading cards that are just gathering dust in your attic) on eBay or bidding sites
    • Find freelance work through online portals like Upwork
    • Send in those rebate forms for things you buy at the store

    There are so many different ways to make extra money on the side for people who are willing to make the time and effort to do them, so grab a pen and a notebook and start listing down all the things that you can do to make extra money and commit to doing them in the soonest possible time!

  5. Avoid missing payment deadlines. When it comes to most loans, you can incur fees or penalties when you miss your monthly payment deadlines. A quick bout with forgetfulness can translate into extra dollars to pay for the following month in the form of penalties, so by all means do set reminders for yourself to pay on time. Arrange for automatic payments through your bank and your lender so you are guaranteed to never miss your due date. Don’t have a bank account? No worries – programming a recurring alarm on your phone or writing all deadlines in your daily agenda in advance will help you to remember that your payment is due.
  6. Save a little bit every month to cover one extra payment each year, at the very least. If rounding up the total or making extra money on the side is not exactly possible, you can just save whatever amount you can each month to come up with a thirteenth month payment at the end of the first payment year. You can also allocate your scheduled work bonus or even tax return money for this instead of using that significant amount of money on non-essentials.
  7. Be on top of your payoff date recalculations. Nothing can motivate you more than seeing how fast you can advance your last payment every time you add a little bit more to your monthly dues. Once you have your recalculated payment schedule, do a monthly computation so you can always know when your “new” last payment date will be. The times you see that last payment month move backwards can definitely do a lot to motivate you to find more ways of making money or even taking your new, frugal lifestyle to the next level.
  8. Have an accountability partner to keep track of your progress. If you think there might be times when you are bound to slip, disclose your plans to pay off your loan faster to someone you can really trust. Ask for help in ensuring that you don’t spend extra dollars on unnecessary things by having a buddy who will point out that the afternoon gelato you are eyeing is not a necessary expense. Having someone “on your watch” can really do a lot to stick to your guns!

If you are able to apply each of these eight suggestions, well and good! You will surely fast track your payments and find yourself out of debt in no time. If you think that maybe just one or two will be applicable to your current situation, that’s also fine – at least you know that you are exerting extra effort in meeting your responsibility of paying off your loan.

Only Good Things

When you strive to make bigger monthly payments as an effort to shorten your car title loan payment period, you will definitely save more money in that you are not going to pay interest rates for as long a time as you initially planned. Just make sure that you inform your lender about additional payments on top of what was agreed upon so they too can make the necessary adjustments to your account. While late payments will naturally incur penalties, you will also be happy to note that paying in advance will not translate into additional fees. In fact, lenders will be happier knowing that they are dealing with a very responsible and committed client because you look for ways to shorten your payment period. So, for the meantime, tighten your belt, wrack your brain for income-generating opportunities, and constantly find ways (and people) to motivate you in seeing your car title loan payments to the finish!

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