You read that right, friends. I paid off my car loan in 2 months!
How’d I do it?
I will show you how. Keep reading to learn my payoff strategy down below.
A Short Background on My Car Loan
This is simple. Most people get a car loan because they are buying a car, right? I got my car loan as a personal loan.
How does that work?
Well, if you own your car free and clear ( that means with no auto loan or any other loan on it) you can get a personal loan using the car as collateral. Basically, a personal secured loan.
Why does it matter?
A loan with collateral generally has more favorable terms than an unsecured loan with no collateral. Better terms mean a lower interest rate, a lower payment, longer repayment terms, and more flexibility in general.
It’s like this because, if you were to default and stopped making your payments, the bank could recoup their loss by collecting your vehicle (a repossession)! With an unsecured loan, a bank would just have a loss.
And, of course, your credit would be negatively impacted in both scenarios, usually.
So, I got the loan to pay off some short term debt. It was an emergency-type situation that arose unexpectedly and despite how prepared I usually am, I was totally caught off guard by this one.
So, I looked at my options. Tap my savings? Borrow from family? Do a secured loan?
I settled on the secured loan and paid that puppy off in 2 months!
How I Paid Off My Car Loan in 2 Months
Once I took out the loan, I made it my goal to pay it off quickly. Here’s what I did:
Step 1.) Figure out how much I could save to make large chunk payments toward the loan
Step 2.) Put my “make extra money” hustle on supercharge so I could earn extra cash fast to put toward the loan
Step 3.) Save, save, save
That’s it! Three steps and in 2 months, car loan paid off!
Figure out how much to save
This isn’t too hard. I started with my balance and then looked at my budget. So, looking at the two, side by side, I was able to determine how much extra I could save to put toward the car loan.
Some things to cut back on:
- Dinner dates out
- Eating out
- Limiting citywide driving excursions
Some things to cut out:
- Lawn maintenance ( we get our lawn cut professionally )
- Grocery shopping without a list
These cutbacks are only temporary. I could add them back in when my loan was paid off OR I could continue to have them out, and just pocket that savings! I’m a big saver so you know I went with the saving option.
Cutting back can be hard but it doesn’t have to be. You don’t have to completely wipe out what you love, just take cheaper alternatives.
- Instead of expensive $40 dinners out on date night with hubby, make dinner at home and have a movie night with wine. Heck, 2 glasses of wine can be the same price as a whole bottle at our local grocery store!
- Cut out cable in lieu of cheaper Netflix. We actually have an Amazon Fire which means we get Netflix, Amazon Video (I’m a Prime and Video member), and more apps available.
- Letting our lawn grow out. It’s winter anyways. Turning off service or cutting back for a few months out of the year is a great savings.
Make money side hustle
Doesn’t everybody have a side hustle nowadays? I certainly do and so does hubby. When it’s time to make some extra money, I put my efforts into hyperdrive!
Here are some ways to make extra money:
- Blogging: Start a blog (psstt..it’s pretty cheap to start one, see here) and monetize it with affiliate marketing, products/services, sponsored posts, and ads. My last blog started earning just under four figures in month 1!
- Drive for Uber
- Sell extra stuff on eBay: So easy. Look around your home for items you can sell (items you would regift, gently used clothing, small appliances, etc.)
- Become an eBay reseller: I opened a store on eBay 2 months ago just to see if I could make money by reselling. I earned over $400 in the first month!
- Get paid to be a transcriptionist: This is easy and hard at the same time. Easy, because all you’re doing is typing what you hear in a recording. You are typing out what you hear, that’s it! Hard, because each transcription company you work for has a style guide that you must follow exactly. It takes effort and dedication to study the guide and do your transcription work according to the company’s rules.
Save, save, save
Once I create my saving plan (above), I just set aside the money in my savings account.
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Paying Off the Loan
So, I put this plan into action and then I executed it! Less than 2 months later my car loan was paid off! It’s a truly exhilirating experience to pay off debt. I hope you find this plan useful. Share your own debt payoff stories below in comments!
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