Five Ways to Pay Off a Loan Early

If you’re like most Americans, you owe money toward a large loan. Whether that means carrying thousands of dollars in credit card debt, having a hefty mortgage in your name, or making car loan payments each month – loan debt is part of your life.

It can all get kind of depressing—but it doesn’t have to be that way. You can pay off your mortgage, auto loan, credit card debt, and any other debt you’re carrying quicker than you thought possible with a carefully applied technique. These tricks won’t hurt your finances in any dramatic way, but they can make a big difference to the total interest you’ll pay over the life of the loan and help you become debt-free faster.

A note of caution before we explore these tricks: Check with your lender before employing any approach, as some loan types have penalties for making extra or early payments.

1. Make bi-weekly payments. Instead of making monthly payments toward your loan, submit half-payments every two weeks. The benefits to this approach are two-fold:

  • Your payments will be applied more often, so less interest can accrue.

  • You’ll make 26 half-payments each year, which translates into an extra full payment on the year, thereby shortening the life of the loan by several months or even years. If you choose this method with a 30-year mortgage, you can shorten it to 26 years!

2. Round up your monthly payments. Round up your monthly payments to the nearest $50 for an effortless way to shorten your loan. For example, if your auto loan costs you $220 each month, bring that number up to $250. The difference is too small to make a tangible dent in your budget, but large enough to knock a few months off the life of your loan and save you a significant amount in interest.

3. Make one extra payment each year. If you can’t make bi-weekly payments, but you like the idea of an extra yearly payment, accomplish the same goal by committing to just one more payment in the year. You’ll only feel the squeeze once (tax or bonus time, perhaps) and you’ll still shorten the life of the loan. You can also spread that extra payment throughout the year. Divide your monthly payment by 12 and then add that cost to your payments all year long. You’ll be making an extra payment while hardly feeling the pinch.

4. Refinance. If interest rates have dropped since you took out your loan or your credit has improved dramatically, contact DoverPhila Federal Credit Union to ask about refinancing, whether the loan is with us or not. Refinancing makes the most sense if it can help you pay down the loan sooner. You should easily be able to afford shortening the life of the loan with a lower interest rate.

5. Boost your income and put all extra money toward the loan. Cut the life of your loan short by earning more money and putting the extra cash towards your loan. Consider selling stuff on Amazon, moonlighting as a consultant, or taking on a side hustle. Even a job that nets you an extra $200 a month can make a big difference in your loan.


Triumph over your loans by using one or more of these tricks to make them shorter and pay less interest. Feel free to contact DoverPhila Federal Credit Union if you have questions about loan repayment or if you need a fresh perspective on debt repayment. Our free, on-staff financial counselors can help!

All You Need to Know About Buying a Used Car

Buying a previously owned vehicle can be a great way to save big on one of your most valuable possessions. If you’re shopping for an amazing deal on wheels, then follow the steps below for a smoother ride!

Step 1: WORK OUT A BUDGET
How are you paying for your new set of wheels?

Your purchase will be fairly simple if you’re paying with cash. You already have your spending cap and you know what you can afford. Just make sure not to spend it all on the car, or you won’t be able to cover your vehicle’s insurance, registration, repairs, and future maintenance.

An auto loan is your best option if you’re unable to use cash. Talk to a lender to determine how much car you can afford. Research a few lenders before making a decision and only take the car dealer’s financing if it beats any other offers you have (but be sure to read any fine print). You may be pushed into taking out a larger loan, but be careful not to let your total monthly auto expenses top 20% of your take-home pay.

It’s also a good idea to get pre-approved for an auto loan before stepping foot in the dealer’s lot or visiting their website. Stop by DoverPhila Federal Credit Union to find out about our fantastic auto loans!

Step 2: CREATE A TARGET LIST
Which make and model vehicle do you want to buy? Do you want a car, truck, SUV, or maybe a hybrid? There are many choices and options. Check out Consumer Reports or J.D. Power for reliability ratings on each type of vehicle from the most recent model years. You’ll find detailed reviews and lists of common trouble spots to note. Narrow down your choices to three or four model cars.

Step 3: RESEARCH
With just a few keystrokes, you can get the skinny on your vehicles of choice. Visit Cars.com or TrueCar.com to get started. You can also find used cars for sale in any of these locations:

  • The used-car section of new-car dealerships

  • Used-car dealerships

  • Used-car retailers like CarMax.com

  • Websites, like Craigslist.com or AutoTrader.com, where car owners list their vehicles for sale

Of the four choices, private-party sellers will likely offer the lowest price. However, these cars are not backed by dealerships, so you’re taking a bigger risk with the purchase.

Be sure to consider the vehicle’s year, make, model and mileage when doing your research. It’s also a good idea to find out what the average asking price is for the car you want to buy.

Step 4: GET THE VEHICLE HISTORY REPORT
Learn all you can about each vehicle once you’ve narrowed down your search. What kind of repairs or maintenance did it undergo? Was it ever involved in a collision? Find out with a vehicle history report.

You can get a detailed vehicle report on AutoCheck.com or Carfax.com. Ask the dealer if they have one available for review – policies vary, but many will gladly show it to your or email you a copy. If obtaining one on your own, you’ll be asked for the vehicle identification number (VIN) or for the license plate number.

Step 5: CALL THE SELLER
Contact the seller to verify the information you’ve learned about the car. If you’re using a private-party seller, then ask the owner why they’re selling the car and inquire about any possible mechanical issues. If you’re working with a dealership, then a phone call or an email is a quick way to make sure the car is still available. You can also ask for any basic information about the car that you weren’t able to find out on your own.

Set up an appointment to take the car for a test drive if everything checks out.

Step 6: TEST DRIVE
Pay attention to these details as you try out your potential new car:

  • Is there sufficient legroom and headroom?

  • Is the ride smooth?

  • How is the acceleration and power?

  • Are the seats comfortable and adjustable?

  • Is the “check engine” light illuminated after initial startup?

  • Do you have full visibility?

  • Are the brakes working well and working quietly?

  • Do all the lights (headlights, brake lights, turning signals, internal lights) work?

  • Do the automatic window mechanisms and lock-door buttons work?

If your car has passed the test drive, then ask to see the vehicle’s service records to determine if the car is current with its scheduled maintenance check-ups.

Step 7: HAVE IT PROFESSIONAL INSPECTED
Private sellers and most dealerships won’t have a problem with you taking the car to a mechanic for an inspection. Having your car professionally inspected will only cost you about $100 now, but it can save you loads of aggravation and lots of money down the line.

Step 8: NEGOTIATE
Here’s where the real fun starts! If you’ve worked out your financing, then you already know your spending cap. Otherwise, work it out now before you start bargaining.

Don’t talk about monthly payments when negotiating a price; talk about the price of the car. Make an opening offer based on the average price for your car and use all the information you’ve learned about your vehicle as bargaining chips. Be firm and don’t sound desperate and you will land up with a fairly priced vehicle.

Step 9: MAKE IT OFFICIAL
You’re ready to become the official new owner of your car.

If you’re working with a dealership, then you’ll sign the contract in their financing office. You may be offered additional products and protection here, but make sure the price is worthwhile. Check with DoverPhila Federal Credit Union first. We are able to extend similar protection to our members and have a variety of options tailored to our members’ needs.

Don’t be alarmed if you see extra charges tacked onto your documentation such as sales tax and a license fee. These are standard in most states. If you’re buying your car from a private-party seller, then make sure the title and registration are officially transferred to you.

Don’t forget to have insurance before driving off the lot. Once that is finalized, you’re all set to power up and take your new car for its first spin!

Click here for more information regarding DoverPhila Federal Credit Union’s auto loans and products.