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Life Goal: Auto Loan Paid in Full


I even paid my auto loan off early!

Paying my car off was not on my 2020 Ta-Da list. The loan maturation date was sometime in April 2021, but past Nat made a terribly awesome decision to pay beyond the monthly payment. I learned a lot along the way, so I’ll share those lessons with you in this post.

Lesson 1: Avoid the auto loan in the first place

In my case, it was unavoidable. I financed my car entirely back in 2015 because my first car had more than its fair share of issues (brakes, suspension, transmission number 3) and after my last car door lock broke – duct tape was involved, I pulled into the CarMax lot about an hour after I got off of a plane.

The sales guy wasn’t going to let me leave in my first car. I still remember his expression when I pulled into the dealership that somehow let my brother have a car and I had the steadier job between the two of us. I had reserved my current car while I was out of state at a convention in Georgia and after my bank sneered at me for daring to get a loan in the first place, I had to eat a 485$ a month car payment with Gap insurance. That was when I learned just how quickly my money moves. Which is a loan rejection reason.

“Your money moves too fast.” Excuse me for paying bills?

Not that said gap insurance did me any good, but it did make my insurance company happy. If I had a better trade-in or actual funds for a down payment, I would have put it down. Instead, I had a 400$ scrap to my name. But I needed a car.

So I now had a six-year auto loan. Yay.

Lesson 2: Pay over the loan’s minimum payment

Don’t ask me where I heard the tip. Maybe it was something I found on the Internet. Maybe it was from a friend. But instead of paying that 485$ a month, I bumped my payment up to $500 a month and hoped it was a good idea. It was a handsome chunk of change to lose each month, but I needed the car and it was a perfect fit for my lifestyle. The cost was doable, but I had to be smart about my budget. Past Nat was a clever cookie. It was just another step in paying off my auto loan early.

Lesson 3: Savings accounts are your friend

Any time I incur any sort of significant windfall (over $300), I deposit it straight into my savings account. Well, I have it set to be wired straight to my savings account so I don’t have to think about it. I just am surprised when I receive a notification from my credit union and do a tiny little dance.

But the hero, in this case, was my savings account. I would check in on my car loan each month to see when it would reach a level that I could pay off all at all.

Once the account hit 3k, I made that transfer the next week.

Don’t worry, I had a full-blown freak out over it. I’ve never moved so much money in my life and I moved across the damn country.

Lesson 4: Pay off the Auto Loan early

I know, I know, the credit experts tell you not to pay off auto loans and personal loans early to because it screws up your credit score. Well, I needed that extra 500$ back in order to make rent, so my credit score can suffer a bit. I had a goal where I paid my auto loan off early. I just didn’t know what early actually meant. But doing so was one of the most freeing things I’ve ever done in my life. Now if only I can unsaddle the credit card debt.

I’m working on it.

Lesson 5: Do not lease an apartment you have to dance to pay for

Still learning this one. Turns out, your first paycheck going straight to a cell phone bill and rent and having to pay remaining expenses from the second paycheck is not my best strategy and I need a new one. Would love to hear some not-spammy feedback on this topic.

Goal 1: Auto Loan Paid In Full – Complete

This was a goal I had on my 10-year plan and I’m happy to say, my car is entirely mine, complete with the overpayment check I deposited into savings.

…And then someone hit me at a red light and I backed into a second car later down the road. Because this is what happens when you own your car outright, right?

Unfortunately, my car has a time limit, because the Silver Comet’s clearance is too low to drive on the beach sand. But that’s a bridge I’ll cross at a future time.

Now it’s your turn. What’s your favorite loan payoff tips you’ve learned over the years? Share it in the comments below so we can help each other!

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