How To Pay Off Your Car Loan Faster (2022)

Your car payment is likely one of your biggest monthly expenses. Figuring out how to pay off your car loan faster can help you save a significant amount of money even if you have one of the best auto loan rates. We at the Home Media reviews team will give you strategies for paying your auto loan off early and explain when it may or may not be right for your financial situation.

Should You Pay Off Your Car Loan Early?

The first step to paying off your car loan early is figuring out whether it’s a good idea to do so. While getting rid of your car payment seems like a major advantage, it may not always be the best financial decision.

How To Use a Car Loan Calculator

Before you try to pay off your car loan early, see if doing it would actually benefit you. The additional savings may not be worth the adjustments you’d need to make to your budget.

One of the easiest ways to find out how much you can save is to use a car loan calculator. These tools allow you to input different scenarios, such as making higher monthly payments, and see how they would affect your loan. You can even see what your payments would be if you refinanced your car loan at a different interest rate.

When You Should Consider Paying Off Your Car Loan Early

There are many situations in which it makes sense to pay off your car loan faster than your contract specifies. Here are some of the most common:

  • You got a raise or extra cash: If you recently got a pay raise or a tax refund or otherwise came into extra unexpected money, you may be able to afford making larger payments.
  • You want to be debt-free: When you pay off your car loan, you go from having debt to having an asset. This could increase your credit score in addition to removing a monthly obligation.
  • You have a high interest rate: You may have had to settle for a high-interest loan when you bought your car. Paying off your loan early can substantially reduce the amount of interest you pay over the life of the loan, especially when your rate is high.
  • You want to save money: Paying off your auto loan ahead of time reduces the amount you pay in interest. Depending on how quickly you pay off your loan, the savings could be substantial.
  • You have a variable-rate auto loan: With loan interest rates on their way up, it may be a good idea to pay off your car loan faster to avoid getting hit with a higher rate.

When You May Not Want To Pay Off Your Car Loan Early

Faster repayment of your auto loan isn’t always the best move. Here are a few situations in which it may not make sense to pay off your car loan faster:

  • Your car loan has prepayment penalties: Some loans come with penalties for early payoff. In this case, you may not save money by repaying ahead of schedule,
  • You can’t really afford it: Stretching to make extra payments on your car loan may seem wise, but if you end up needing to borrow money as a result, it can hurt your financial situation.
  • You have other debts with higher interest rates: In many cases, the interest rate on a car loan is lower than the rates for credit cards, personal loans, student loans and other types of financing. If you have loan debts with higher interest rates, it usually makes more sense to pay those off early.

5 Ways To Pay Off Your Car Loan Faster

If you’ve decided that going for an early loan payoff makes sense, you have several ways of doing so. Your best option depends on your personal finance situation and money habits.

#1 Refinance Your Car Loan

Refinance auto loans offer you the opportunity to get a new interest rate and new loan term. If you can afford higher payments, you may be able to secure a refinancing loan with a lower interest rate and shorter term.

However, a refinance loan is just a new car loan for a vehicle you already own. It may come with the same fees and additional costs as other loans, so include these costs in your calculations.

#2 Split Your Bill Into Two Biweekly Payments

At first glance, making half payments toward your car loan every two weeks might seem like a net neutral. However, this will result in 26 payments over the course of a year instead of 12. That means you’ll make an additional month’s payment each year.

#3 Make a Large Payment

If you come into extra money from a job bonus, tax return or other source of additional income, making a large lump-sum payment toward your auto loan can help you pay it off faster. That’s especially true if your lender counts additional payments beyond the required debt payment toward the principal. This will also reduce the amount of interest you get charged going forward.

#4 Round Up Your Car Payments

Any additional amount you pay toward your car loan will help you finish paying it off early. Simply rounding your payment up to the next $50 or $100 increment can go a long way. For example, if your car loan payment is $365 per month and you pay $400 per month, you will have paid an additional $420 toward your loan after a year — more than a month’s payment.

#5 Review Additional Car Expenses

You may be paying for things you don’t need with your car loan. Dealerships typically roll things like gap insurance and car warranties into purchase loans. In some cases, you can get a partial refund by ending this coverage, which lowers your monthly payment. If you continue to make the same payment you were making before, you’ll pay your auto loan off faster.

How To Pay Off Your Car Loan Faster: The Bottom Line

For many people, ending car payments can be a game-changing financial move. When it comes to how to pay off your car loan faster, you have more than a few options. Whichever way you choose to go about it, first make sure you’re in the right position to benefit from paying your auto loan’s remaining balance off early.

Should You Pay Off Your Car Loan Faster: Checklist

To help you decide whether or not it makes sense to wrap up your auto loan early, we’ve created a checklist. If you check most or all of the items on this list, it’s worth looking into how you can pay off your car loan faster:

  • You can save a significant amount of money by paying off your loan early.
  • You can achieve other financial goals by eliminating your loan payments.
  • You can afford to make larger payments or one large payment.
  • Your loan doesn’t have a prepayment penalty.
  • You don’t have other debts with higher interest rates.
  • You can refinance your loan without too much additional cost.

Our Recommendations for Refinance Auto Loans

A refinance auto loan may be a great way for you to pay off your car loan faster — as long as you secure affordable rates with a reputable lender. Sourcing quotes from providers allows you to compare them and see who offers the best refinancing rates for you. We recommend starting your search with one of the following providers from our list of the best refinance auto loan companies.

Auto Approve: Top Choice for Refinancing

In our review of the best auto loan providers, Auto Approve was named Top Choice for Refinancing. As a refinance-only lender, Auto Approve has competitive rates for borrowers who want to get new loans to pay off their car loans faster. The company also has a very easy online application process and doesn’t charge prepayment penalties.

Keep reading: Auto Approve review

MyAutoloan: Best Low-rate Option

For those looking for refinance loans, the marketplace model at myAutoloan is worth checking out. Rather than having borrowers search for lenders, the site allows borrowers to submit their information and lenders to come to them. This makes comparing offers simple and efficient.

In addition, myAutoloan is open to borrowers with credit scores as low as 575. That means people with less-than-stellar credit history may also find refinance auto loans.

Keep reading: myAutoloan review

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Reputation (25% of total score): Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
  • Rates (25% of total score): Auto loan providers with low APRs and high loan amounts scored highest in this category.
  • Availability (25% of total score): Companies that cover a variety of circumstances are more likely to meet consumer needs.
  • Customer Experience (25% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.


*Data accurate at time of publication.

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