Car debts often eclipse a person’s credit card balances by a long shot. It’s not uncommon to have $30,000 up to $60,000 or more in car debts.
Worse, monthly payments can exceed $1,000 a month — almost as much as a small rent or mortgage payment! This can put a huge strain on your ability to meet all your monthly obligations.
Obviously, if you can reduce your car payments or get rid of them altogether, then it will be better for you financially.
Pay Just a Little Bit Extra
One way to get rid of your car debts is to pay off your loans earlier than expected. It’s actually not that hard to do. Simply pay an extra $10 or $20 a month.
You won’t miss such a small amount of money, but your loan balance will step down faster. You may be able to shave off a few months of payments over the life of the loan.
Downsize Your Car
Probably one of the fastest ways to make your car debts go “poof!” is also the most difficult emotionally. That is to downsize your driving lifestyle.
Instead of driving a new Acura, sell it and get a used Honda. Instead of driving a new Lexus, sell it and get a used Toyota. Instead of driving a new Cadillac Escalade, sell it and get a used Toyota 4Runner.
You get the idea.
By selling one of your vehicles, you can instantly wipe out thousands of dollars in debt, maybe even tens of thousands of dollars. Then, when you purchase a used vehicle as a replacement, your car loan may only be one-fifth or one-third of the old loan amount.
This will not only reduce your debt, but reduce your monthly payments as well — both really positive things if you’re trying to become debt free.
Become a One-Car Family
For most of my 10 years of marriage, my wife and I (and kids!) have shared one car. This is not always possible, but we’ve been able to make it work during different periods of time.
If you have two car loans on two different cars… and you sell one car… you may erase half of your car debts in one fell swoop!
And I can tell you from personal experience that it’s WAY easier to take care of one car compared to two. It’s half the oil changes, half the repairs, etc.
Live Closer to Work
By living closer to work, you may not reduce your car debts, but you will save money on gas, insurance, maintenance, and repairs.
If you live close enough, you may even be able to ride a bike or walk to work. Or carpool.
Some brave individuals have moved closer to work and gotten rid of their cars for good. They use only human-powered and public modes of transportation. And it can work well for certain people.
Others who live in warmer climates may want to trade in their car for an inexpensive motorcycle or motor scooter. Again, this is not for everybody, but it works well for some.
Car Debts Be Gone!
No matter what angle you take, you can quickly get in a better financial situation by eliminating or reducing car debts. Thankfully, once you get over the emotional resistance you may have, it’s actually easy to do.
Here are the four strategies: Pay off your loan faster, downsize your car, become a one-car family, and/or live closer to work. Choose the approach that works best for you.