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Making a Double Payment to Cut Time Off Loan

On your first car payment, if you make a double payment will that cut any time off your loan or even do any good?

Today, most car loan notes permit early payments, and each early payment will reduce a borrower's overall interest cost. If you double up on the first payment only, and then make one full payment each month, you'll accomplish two things.

First, you'll pay the loan off one month early (earlier, if you double up on more than just the first payment). Second, if your loan is paid ahead, you may be able to skip a month if a money crunch occurs (check with your lender before doing this, though!) As a general rule, the earlier you pay the loan off, the lower your interest cost will be.

Published on 3/28/07