The Silent Wealth Killer
Amortization is designed to profit the bank first, you second. In the first year of a loan, a huge chunk of your payment goes to interest, not your car's value.
The "Bi-Weekly" Hack
Instead of paying monthly, pay half every two weeks. There are 52 weeks in a year, which means 26 half-payments. That equals 13 full payments per year instead of 12. You painlessly pay off your loan faster.
The Principal Strike
Any extra money you pay should be designated as "Principal Only." Even an extra $50/month attacks the loan balance directly, bypassing interest completely and shortening the loan term.
Loan: $30,000 at 6% APR.
60 Months: Payment $580 | Interest Paid: $4,799
72 Months: Payment $497 | Interest Paid: $5,797
You save $83/month, but you pay $1,000 more in interest and are in debt for another full
year.
Amortization FAQ
Most car loans are "simple interest," meaning interest accrues daily on the balance. This is good news: it means paying early in the month saves you pennies that compound into dollars over years.
If your interest rate is above 5-6%, yes. If you have a 0.9% or 1.9% promotional rate, you are better off keeping the cash in a high-yield savings account earning 4%+.