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Sick and tired of having a car payment eat up a huge chunk of your budget? Here are tips you can use to pay off your car loan faster!

Finding Money to Pay Off the Car Loan

One of the biggest changes we made that has boosted our budget and reduced a ton of stress was getting rid of our car loan.

If you're like us, you might sick and tired of seeing a large chunk of money coming out of your budget month after month just for your car payment. Have you ever wondered what it might feel like to be free of it? Let me take you through how we paid off our car loan early and enjoyed the extra freedom in our budget!

Get rid of Car Loan faster

One of the first things you need to do is find some extra cash in your budget. Easier said than done, right?

The good news is that we were able to find spots in our budget where we could save big (and without sacrificing fun). As new graduates, our income wasn't big.

Here are some spots in the budget that can give you a boost of money.

Slashing Entertainment Bills

Believe it or not, I'm not telling you to skip out on TV or movies. We all need to veg out sometimes.

The good news is that there are plenty of options that don't cost $150/month like some cable and satellite companies are charging.

Part of the problem is that most customers are paying way more for channels and extras they never use.

The solution is creating your own entertainment package at a fraction of the price.

Pick and choose what fits your family's needs. For us, we have our Netflix and Hulu accounts tied to our Roku.

Sick and tired of your car payments? Learn how you can dump your debt even if you have a tight budget! #family #money #save #debtfree

Switch Your Cell Phone Plans

Like many, I love my smartphone. I use it throughout the day. It's a convenience that I don't want to give.

With many of the major carriers, though, cellphone bills can easily eat up a family's budget.

The good news is that there are some wonderful options out there for you to slash your bill while still keeping a great smartphone plan.

  • Republic Wireless: My personal favorite, I use them for my personal and work phone. Yep, I have two lines with them and guess how much it costs? It's $55/month! Check out Republic Wireless here. 
  • Mint Mobile: Mint offers super affordable plans starting at $15/month. You can bring your phone over for even extra savings.
  • GoogleFi: Another cell/wifi option that can give you cheap service. Users in the US pay $20/ month for unlimited calls and texts with $10 more for each GB of data. Check them out here.

Yay for technology!

Price-Hunt Your Insurance

We were able to significantly cut our auto insurance premiums by switching providers.

By using our Costco membership our car insurance premiums went from $118/month to $58/month.

Since we have an Executive membership at Costco, we also get free towing and jump starts included so we allowed our AAA to lapse and saved a bit more.

As you can see, we were about to save hundreds of dollars each year by looking at our car insurance options.

If you’re pressed for time, but still want to shop around for the best rates on car insurance, here's a list of the biggest auto insurance companies out there now:

You also want to see if you can bundle your home insurance and get even more savings!

Automate Your Savings into a Debt Snowball

Finally, take a few minutes and track your spending so you're not missing any money leaks.

Use a tool like EmpowerTiller, or Mint that will track your expenses for you and in fifteen minutes you can create an effective budget that will help you reach your goals.

With Personal Capital you can grab the data easier and see what you can adjust your spending.

Set up automatic payments through your bank or credit union towards the car loan.

Having that taken care of will allow you to stay on track and give you more time to focus on what you enjoy instead of sweating the details.

From Dumping the Car Loan to Finding Financial Freedom

The joy of watching our car loan shrink was not just about the numbers on a screen.

It was the transformation and the shift in our habits habits, that eventually gave us a taste of financial freedom. We didn't just slash expenses; we simplify our finances so we had more money for what we truly loved.

This post was originally published on October 2009. It has been updated in June 2023

About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

18 comments add your comment

  1. We bought a new minivan this past summer. I negotiated a deal on it, and we paid for it in cash. Why new in this case? We plan to have 3 children and will use it for years. I am expecting #2 now and my mom is moving in with us to be our child care. My civic cannot seat 3 adults and 2 rearfacing children. It just won’t work. Also, we checked out many used minivans. It seems these vehicles get quite the workout and are not in the best shape when they get sold. I ended up biting the bullet and buying a nice minivan that had all the features I wanted. The main thing is that I had saved up a fund specifically for this purchase and did not go over my budget. 🙂

  2. I’m so glad you planned ahead and got the car you want with getting into debt! I wish you family well. 🙂

  3. This article has come at the perfect time for me. I’m so sick of having a car loan. $316 per month. When I think how great my emergency fund could be with that extra cash, or how much more I could pay on student loans (not too high–about $3,000), I am determined more than ever to pay off my loan. I bought a 2005 Toyota Corolla in March ’09 and it had 3,500 miles on it. As a relatively new graduate, I saved to put down $3500, but with my limited credit history, financing was hard to find. Eventually, i scored a loan, but at about 12%! My plan was to pay it on time each month for one year to help build my credit and then refinance through my credit union at work. I did just that in March 2010 at a 5% rate. I now have $8500 left on the car loan.
    I AM DETERMINED TO PAY IT OFF IN ONE YEAR. I’m a nurse and if i I work just one extra shift per month, I could DOUBLE my payment and pay it off. Add in my yearly bonus/pay for skills check, and taxes, I think it’s doable.
    I cannot wait to be “debt-free” since I have no credit card debt; only student loans.

  4. I felt as though this was impossible on a part time pay of $220.00 a week and two car notes. My fiance and I both worked at the same company and both lost our jobs during a merger. I was lucky to find work and she hasn’t just yet we didn’t get unemployment (fighting the case for wrongful termination), but with a vehicle from JD BYRIDEr. Yea I know I was stupid and desperate my 2002 PT Cruiser is costing me $180.00 every two weeks plus gas and full coverage coming out to about $450.00. Then comes my fiancée’s car -2005 dodge with a not of $279.86 a month.

    These are the steps I took – first, found a studio apartment to live in with everything electric; applied for lower energey rates for being in hardship. I went from a $865.00 apartment to a $385.00 studio about $500.00 in savings a month. I then switched from Progressive to Liberty Mutual insurance, dropped in total from $189.87 each to just under $60.00. It is still a tight squeeze and a huge sacrifice, but its better then being in the streets and this gives us time to learn better money management.

  5. I’m 88 years of age and cannot invest in an IRA but have some money I would like to place in a inividual account and draw rhe interest annually. What is your advice on that?

  6. I have 10980 left to pay 24 months exactly on a 5 year car loan . I am paying 100 extra permonth . is this the trick ? am i doing the right thing . by paying it in the payment or should i send it seperately .

    • Send it separately. Marked specifically, “apply to principle only”. Seriously.

  7. If you find extra money every month, why sink it in something like a car note? Just keep paying the car note as scheduled and put that extra money towards your mortgage…or invest it…idiots

    • We’re looking at the long term Jason – paying off the car loan can help you save on interest. Once it’s paid off you have better cash flow with your family’s budget. Which you can use for investing or a mortgage. Look at the numbers – car loans usually have higher interest rates than mortgages now. Why would you put the money on the mortgage?

      Don’t be in a rush to call people idiots – it makes you look like the fool.

    • We’re looking at the long term Jason – paying off the car loan can help you save on interest. Once it’s paid off you have better cash flow with your family’s budget. Which you can use for investing or a mortgage. Look at the numbers – car loans usually have higher interest rates than mortgages now. Why would you put the money on the mortgage?

      Don’t be in a rush to call people idiots – it makes you look like the fool.

    • If you owe money on a car, that’ll affect how much a bank is willing to lend you to buy a house. By eliminating the car payment, you increase the amount of house you can afford. Personally, I’d rather have a nice home than a really nice car.

  8. My husband came into some inheritance money and has decided he’s going to pay off his 2010 Camry loan ($20K left at $400/month for 4 more years) and buy a 2012 something or other with a large downpayment and a smaller loan ($180/month for 4 years). I say that’s stupid and that he should just pay off the existing Camry, keep it and forget about the other dream car (and another loan). He won’t listen and its his inheritance money, but isn’t that dumb?

  9. I just landed a high paying job and am cutting my 60 month payment into 9 months and paid off. The interest rate was almost 18 % (recent credit issues last few years) and doing it this way will cut off almost ALL the interest. I havent figured out exactly WHAT my interest rate will be doing it this way but it comes out WAY better then it would have at 60 months. Id be paying over 12,000 dollars for an 8,000 dollar car. Its in great shape. Five years old with just 60,000 miles. I also dropped the “extended warranty” and that will be applied to the principal, the refund on that being $1,200.00 and also dropped the “gap insurance” having another $300.00 taken right off the principal. The basic rule of thumb i have found is they cant charge you interest on what you DONT HAVE FOR A PRINCIPAL. Will my credit union LIKE not getting any of this interest? No, id say not but i read my paperwork and it says right on my contract NO EARLY PAY OFF PENALTY. Good thing im doing this as it looks like i will need the money for GAS at almost $4.00 a gallon now!

  10. I have 3 years left on my car loan. Based on my current income and the strength of my career field, I don’t anticipate having any problems paying off that loan. The interest rate is so low that what I pay in interest per month is almost insignificant. Unlike a lot of Americans, I don’t have any other major debts like student loans, a mortgage, etc. But lately, I find myself wishing I didn’t have a car payment. it’s not as if the car loan is weighing me down. I think it’s more psychological. I just want that feeling of being free. Of course, someday I’ll buy a house and it would be nice to have extra money for that. Plus, I know lenders look at your total debt payments when deciding how much they’ll lend you. After reading this and similar articles, I’ve decided to do what I can to pay off my loan early. I may end up only saving myself an extra 6 months. But at least I’ll be spending less time in debt. I’m still forming a strategy, but I imagine it’ll involve a combination of spending reduction and applying a little extra each month to the car loan. And if, by some chance, my company does give me bonus this year, I know where it’s going.

  11. We know this feeling all too well. Especially after walking into a dealer and purchasing a brand new car for $26,000 with no money down. A couple of years ago, my husband’s car broke down and we purchase a used Honda for $4,000. What a great feeling to walk away w/out any payments. Your bundling is awesome! I will have to tell my husband about that. I would like more details as to how you created your own bundle. Also, I feel the same w/our phone. I keep running us over texts and it charges us .15 per text for overage. Something is going to need to change, but we would rather have our cellphones than a landline.

  12. My husband’s truck payment is over $600.00/month, my car payment is almost $400.00/month. That’s $1,000.00/ month, just for vehicles! Oh, I can’t wait to have no car payments!!