A recent LendingTree study found that 61.2% of Gen Xers in the 100 largest U.S. metros currently carry auto loan debt, the median balance of which is $23,260. The generation with the next-highest auto loan debt is millennials with a median balance of $20,826.
The exact amount of auto loan debt varies by location. However, consumers in McAllen, Texas owe the most across all generations surveyed — Gen Z, millennials, Gen X and baby boomers.
Having to deal with debt can be stressful, especially if you owe money on other things — like a mortgage or credit cards.
If you’re in Gen X — that is, if you were born somewhere between 1965 and 1980 — you might want to prioritize paying down your debts one at a time, starting with your car loan.
Here are some tips to help you do this:
Refinance your loan. If you have excellent credit and can get a lower interest rate, refinancing might make sense. It might mean getting a longer repayment term, but if your monthly payment is smaller, you may be able to make larger payments to pay off your balance sooner. This can also save you money on interest.
Pay more frequently. If it’s feasible for your budget, make an additional payment each month beyond your usual one. Even if that second payment is smaller, it can go a long way to getting rid of your debt.
Use a windfall. Have you come into a financial windfall recently — like a sizable tax refund or a bonus? If so, use it to pay off your remaining balance, or at least a chunk of it. You don’t have to use the whole thing if you don’t want to, but even an extra $500 or $2,000 can help.
Review your add-ons. Your loan agreement should include any details about what you’re paying for your loan. Check it and see if there are any add-ons you can get rid of. This might be something like an extended warranty or an optional maintenance package. Whatever the case, canceling the service could get you a small refund — which you can then put toward your loan.
Reassess your budget. A simple strategy is to simply review your budget for areas where you can lower your day-to-day expenses and put that extra cash toward your loan. This doesn’t have to be a forever solution — just long enough to get your balance to zero.
Keep in mind that some car loans come with prepayment penalties, which can negate any savings you might have had by paying yours off early. Look into that so you don’t get blindsided when the time comes.
If you don’t owe a lot on your auto loan, or if you have more pressing financial obligations, you may want to prioritize other important expenses first.
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