How I’m Paying My Car Loan Off in Half the Time

In September of 2009 I was in a major car crash with two other vehicles.

A driver ran a stop sign at 50 miles an hour, smashed into another car that skid into my lane and collided into me.

We all walked away from the accident, with no major injuries, but all three cars were completely wrecked and unable to be driven again.

I traded in my first car to purchase this vehicle, which is now nothing more than scrap metal. So being forced to go car shopping again was not exciting to say the least.

I had worked really hard to pay down that car loan, and I was nearly finished. Purchasing another car was definitely not on my to-do list, as I was working diligently to get out of any kind of consumer debt.

The one upside is that I had some equity in the car after the insurance sent me a check, so I was able to put some money towards the purchase of a new vehicle.

I loathe having to take out loans or put things on credit and I try to avoid doing so. Since I was in the midst of paying off debt, I only had a starter emergency fund in place ($1,000) which I decided I wasn’t going to touch.

So, with this accident I was left with no car, only $6,000 cash but a fairly decent credit score. I found a new 2010 Scion TC, that stole my heart, and I decided I just had to have it.

Fortunately, I’ve been able to put extra towards the principle each month, whether it’s been a substantial or small amount. I was getting anxious to become completely debt free, so in January of this year I decided to refinance my loan to hopefully pay it down even quicker.

I was able to cut my 5.75% interest rate to a loan with 3.49% interest rate. Which was very worth the savings (and $75 loan fee) to me. I went from having to pay $1,413.22 interest over the life of the loan, to only $774.85 which is a $638.37 savings.

By leaving the automatic payments the same (paying the same amount as before), I will be able to pay off my loan 3 months sooner, all without putting extra money towards it. That is priceless.

If everything still goes according to plan, I will pay off my car loan by the first part of next year and be completely DEBT FREE!!! In total I will have paid down my 4-year loan within 2 ½ years -or almost half the time.

I know it’s all physiological, but I do believe my car will drive better when there isn’t a payment trailing behind it and I can’t wait!

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