‘The difference it had made’: Woman shares hack her car salesman taught her
At some point, everyone who’s ever made a car payment has felt that they’re being ripped off. In October 2023, Money noted that car payments in America had reached a record high of over $700 per month, and a 2021 article from Consumer Reports found that a significant amount of Americans were overpaying on their car loans.
The reason for these high payments has much to do with the incredible interest rates that are being charged on car loans. In December 2021, the average interest rates on a 60-month new car loan was 3.85%; by last month, this average had rocketed up to 7.92%, per Statista.
Seeing this, many with car payments are trying to find any way to get rid of their car payment faster. One user on TikTok has sparked discussion with a possible solution.
Why you should make multiple payments on your car
In a video with over 6 million views, TikTok user Sierra (@sishowman) revealed a ‘hack’ that she says was shown to her by a car salesman.
“He told me to pay half every two weeks instead of paying in full once a month,” she states in her video. “This is the most basic f***ing hack ever, but I cannot f***ing explain the difference it has made.”
According to Sierra, she paid her initial car payment in full. However, 80% of that payment went to paying off the interest on her car loan, while 20% of it went to her principal.
“Now that I've been paying every two f***ing weeks because it knocks off the interest like crazy, 80% of my money goes towards the principal amount of my car payment,” she says. “Do you f***ing understand how much money I am saving?”
“And paying every two weeks, you get an extra payment by the end of the year, so you pay off even faster than you already are,” she concludes. “Life-changing.”
Does this hack work?
While this may not be universal and may depend on the specific terms of your loan payment, there’s evidence to suggest that what Sierra is saying is true, at least in her specific case.
“Biweekly savings are achieved by simply paying half of your monthly auto loan payment every two weeks and making 1.5 times your monthly auto loan payment every sixth month,” reads a page on the website for the First National Bank of River Falls. “By the end of each year you would have paid the equivalent of one extra monthly payment.”
“This additional amount accelerates your loan payoff by going directly against your loan's principal,” the site continues. “The effect can save you thousands of dollars in interest and take years off of your auto loan.”
Sierra later posted an update video revealing just how much she’s saving by switching to bi-weekly payments.
@sishowman this works for any loan i think but for car payments especially its SO NICE. world of a difference #cars #carloan #interest #moneyhacks ♬ original sound - si
Commenters speak to the veracity of her claim
In the comments section, several users claimed that they’ve achieved similar results using this method.
“YESSSS. i swear by this!! i pay half my car payment every 2 weeks & my car payment is down sooo much!” exclaimed a user.
“I love making my car payment every 2 weeks,” added another. “I pay 157 every 2 weeks and about 10 dollars go to interest.”
Others offered similar advice.
“Another hack is after 6 months you can refinance your car through a different bank! i went from paying $400 to $265,” noted a commenter.
“Now add an extra $10-$20 to each payment (if you can) and it’ll be paid off even faster,” stated a second.
The Daily Dot reached out to Sierra via Instagram direct message.
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