Once you’ve looked at various vehicle finance interest rates available in 2018 and in South Africa, and chosen the best possible loan amount for your budget, it’s a massive financial responsibility for you in your life. So, the faster you’re able to pay off your loan, the less interest you will pay and the more you will be able to use that money for other expenses. If you focus on setting up a realistic budget, and you’re determined, this will positively influence your future.
Apart from the simple fact of needing to pay off your loan because it’s a good move, here are a few ways in which you can save and benefit from paying off your vehicle finance quickly when you receive your new car.
You will be able to save large amounts on interest
Every month, your monthly instalment value will have an interest rate attached to it. The faster you’re able to crush your monthly payments, the less your interest rate will be over the long-term. Increased interest rates are usually issued to people who are unreliable with their payments or who cannot pay more than the recommended amount. If you push out your loan repayments to cover a longer period of time, your interest will increase and you will be spending more than expected over the duration of your loan agreement. So, if you’re able to pay your recommended amount and more each month, your interest rate will decrease as well as your balance.
If you have a budget in place, you will be able to monitor how much you are able to save, should you pay more in loan repayments.
You will be able to save for a new car
In today’s day and age, it’s not always possible for a young adult to be able to put down a large deposit on a vehicle. Or to be able to save enough money to comfortably pay for a car in cash. With living expenses increasing and salaries stagnating, it’s important to take any opportunity to save every month for your future. For instance, a new car for your future, You might want to look at buying a new vehicle once your existing vehicle is paid for. Whether that’s in three, five or seven years time, in the interim, you will at least be able to save the money you would have spent on interest.
You will be able to save on vehicle insurance
The more your vehicle repayments are, the more your insurance cost will be for your car. The reason for this is because lenders want to ensure that they (as well as you) are completely covered during the years that you will be paying off your vehicle with them. Once your car is paid for, you will be able to reevaluate your car and ask your provider to devalue your vehicle. This means that you will pay less in insurance costs. Or, you will be able to reduce your amount by removing certain coverage related to your car payments going forward.
You will be able to enjoy the much-needed financial freedom
As it stands, you’re likely to have many expenses and little opportunity to enjoy the money that you work hard for. If you are able to pay off your loan sooner rather than later, you will be able to enjoy your financial freedom and divert that money into other areas of your life. Whether you choose to save it or not, you will be able to achieve more during the month and enjoy your money with one less obligation.
Over and above these benefits, paying off your vehicle finance deal will leave you with more peace of mind. If ever you find yourself in an accident and need to cover the outstanding costs on your car, at least you will be able to do so without having to stress about not having access to the amount needed. Less financial obligations can open up many doors for you, and more importantly, it will reduce the amount of stress you have about money.