Car loan guide

How to pay off a car loan faster: 6 ways, with real numbers

By Sergio Ruiz · Last reviewed: October 8, 2026

The short answer

The simplest way to pay off a car loan faster is to send a little extra toward the principal every month. On a $28,000, 60-month loan at 7.5%, an extra $100 a month saves about $1,036 in interest and ends the loan 10 months early. Before you start, check for a prepayment penalty and confirm that the extra money is applied to principal.

Every example below uses the same loan so you can compare the methods: $28,000, 7.5% fixed rate, 60 months. The scheduled payment is $561.06 and the total interest over the full term is $5,663.75.

1. Add a fixed extra amount every month

This is the easiest method to automate. Because the extra money reduces principal from the first payment, it starts saving interest immediately.

Extra per month	Interest saved	Months saved	Total interest paid
+$25	$301.35	3	$5,362.40
+$50	$571.59	5	$5,092.17
+$100	$1,036.29	10	$4,627.46
+$150	$1,421.80	14	$4,241.95
+$200	$1,747.12	18	$3,916.63
+$300	$2,264.25	23	$3,399.50

Assumptions: $28,000 loan, 7.5% fixed rate, 60 months, extra amount applied to principal every month from the first payment. Method: How the calculator works.

2. Round your payment up

If you do not want to think about a separate extra amount, round the payment up to the next round number. Paying $600 instead of $561.06 means an extra $38.94 a month. On the example loan that saves $455.30 in interest and 4 months.

3. Put windfalls toward the loan, and send them early

A tax refund, a bonus or a gift can shorten the loan, and the timing matters. On the example loan, a one-time $2,000 payment in month 7 saves $748.69 in interest, while the same $2,000 in month 19 saves $553.17. Both shorten the loan by 4 months, but the earlier payment avoids more interest because the balance is higher at that point. A $5,000 payment in month 7 saves $1,720.88 and shortens the loan by 11 months.

4. Make one extra payment a year, or pay every two weeks

Paying half of your payment every two weeks adds up to 26 half payments, which is 13 full payments a year instead of 12. That is the same as one extra payment each year. On the example loan, one extra payment of $561.06 each December saves $438.52 and 4 months. Spreading the same amount as $46.76 more each month saves $537.86 and 5 months, because the money arrives sooner.

Before you switch to a biweekly schedule, ask whether your lender accepts partial payments, credits them as soon as they arrive, and does not charge a fee for the service. If it does, you can get the same result by adding the extra amount to your monthly payment.

5. Make sure the extra money goes to principal

An extra payment only works if it reduces what you owe. The Consumer Financial Protection Bureau explains that payments are generally applied to fees first, then to interest, and then to principal. It recommends checking your loan documents to see whether you can ask your lender or servicer to apply more of your payment to principal, contacting them to ask how payments are applied, and reviewing your statement to confirm what happened.

6. Check for a prepayment penalty, and think twice before refinancing

Some car loans charge a fee for paying off the loan early. According to the CFPB, your contract and state law determine whether you can pay off an auto loan early, and some states ban prepayment penalties for certain loans. Look at your contract and your Truth in Lending disclosures. If you are considering refinancing to a lower rate, remember that the original loan must be paid off in full, so a prepayment penalty could apply.

Which method is best?

The best method is the one you will actually keep doing. In general, more money and earlier money save more interest. A fixed monthly extra plus any windfalls you receive works well for most people. Whatever you choose, compare the interest you would avoid with other uses of the money, such as an emergency fund or debt at a higher rate.

Frequently asked questions

How much does an extra $100 a month save on a car loan?

On a $28,000, 60-month car loan at 7.5%, an extra $100 a month saves about $1,036 in interest and ends the loan 10 months early.

Will paying extra lower my monthly car payment?

No. Your required payment stays the same and the extra principal shortens the loan. The balance reaches zero sooner.

Is a lump sum better than extra monthly payments?

Both reduce interest, and the earlier the money reaches the loan the more it saves. On the example loan, $2,000 paid in month 7 saves about $749 in interest, while the same $2,000 paid in month 19 saves about $553.

How do I make sure extra payments go to principal?

Check your loan documents, ask your lender or servicer how to apply extra money to principal, and review your statement to confirm how the payment was applied. The CFPB notes that payments are generally applied to fees first, then interest, then principal.

Related guides

Try it with your own loan. Enter your balance, rate and remaining term, add an extra payment, and see your new payoff date.

Open the car loan calculator

Sources and method

All figures were calculated with the Financial Accelerator engine; the formulas and assumptions are public in How the calculator works. Other calculators can show slightly different results depending on when they credit the extra payment.
Consumer Financial Protection Bureau, Is it better to pay off the interest or principal on my auto loan? (reviewed January 30, 2024).
Consumer Financial Protection Bureau, Can I prepay my loan at any time without penalty? (reviewed January 30, 2024).

This page is educational and not financial, legal or tax advice. Confirm the terms of your own loan with your lender.