Automotive Tips & Advice

If you have the capabilities to settle or pay off your car finance earlier than the original period end date, it is something that any car owner should consider.


Paying off a car loan early will ultimately land up saving you money in the long run. The simple reason behind this is that you settle the loan earlier so you end up saving on the cost of your interest.


How to pay off your car loan sooner

Paying off your loan earlier can be achieved in two ways:

  1. A vehicle owner who has a finance loan can either settle the account in full if they happen to have some extra cash, but this depends on if there are other things they should do with the money.
  2. Or vehicle owners can simply increase their monthly instalment amounts. This will chip away at the debt quicker and will end up costing the vehicle owner less in finance interest.

Suggestions on what to do to pay off your car instalment agreement earlier

There are a number of ways and combinations that you can use to pay off your car loan earlier. Below are a few combinations that any car owner can implement to smooth out the process and achieve the desired result:

  • Pay half your monthly instalments every two weeks. You will need to arrange this with the banks but it can benefit you if you can get it implemented.
  • Round up - If your monthly instalment amount is R3 247per month, you have the option to round up your instalment to R3 500. That slight increase might end up saving you a few thousand rands on interest and shortens the loan period.
  • Make one larger extra payment per year. If you save up monthly and make one additional larger instalment per year over and above your usual monthly payments, this will go a long way in helping you to pay the car off earlier.
  • Save up and make one large additional payment over the term of the loan, like a deposit. The earlier on in the loan term that you can make this payment the more you will end up saving.
  • Never skip payments. Skipping a payment will lengthen your loan term and this will end up costing you more money in interest.
  • You can renegotiate your loan terms. Only do this if you are shortening the loan period. Renegotiating to pay less but over a longer loan period will cost you more, so only look at this option if you are shortening the loan period. However, this will cost more monthly, but over the loan period, it will cost you less in interest charges.

At the end of the day, the whole concept is to shorten the loan period by paying off the loan as quickly as you can afford to.


There are some slightly negative aspects to paying off a car loan early because it can negatively affect your credit score. Having an open positive credit account will have a greater impact on your overall credit score than a closed account.


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