The sooner you can get out of debt, the better. Although loans for purchases such as homes and cars have a designated repayment period, accelerating the payoff can save you hundreds or thousands of dollars in interest, depending on loan amount and interest rate. Making additional payments is one way to accelerate the loan payoff.
Step 1
Read over your loan document. Make sure extra payments will not trigger a fee or penalty. Some fixed-rate loan agreements do not allow extra payments.
Step 2
Add the extra amount when you make your regular monthly loan payment.
Step 3
Notate clearly that the payment should be applied to principal. If you do not specify, the lender might apply the extra payment to interest. To accelerate payoff, your goal is to reduce principal.
