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Congratulations! You made the final payment on your auto loan. It's time to celebrate this monumental achievement. You not only own an asset free and clear, but the extra room in your budget feels like you just received a generous pay raise. After putting away the party hats and sweeping the confetti, you might wonder, "What should I do now?"
Here are three ideas that could help you decide your next money move.
1. Keep Making the "Payment"
Even though you're no longer required to make a loan payment, act as if you still owe it each month. But, instead of paying the lender, pay yourself. Deposit money into a money market account that produces higher earnings based on your balance. This will relieve the pressure to waste the money on mindless purchases and help to quickly grow your savings.
2. Set a New Financial Goal
Your plans to save for an emergency, pay off credit card debt, or catch up on retirement savings have been postponed because you had little leftover each month. Now that you've paid off your auto loan, it's time to claim a new financial goal. Redirect your old loan payment to take another step toward financial security.
3. Upgrade Your Vehicle
Your ride may be at least eight years old, depending on the loan term. Car manufacturers have made significant safety and technology improvements in the past decade, making it cheaper to fuel and maintain a new vehicle. Consider trading in your asset to reduce the price of a new model.
Or, if you need a second car, financial institutions have programs that allow you to slide into the driver's seat of a late model vehicle with payments lower than you might think. Explore your options with Vermont Federal's PaySaver Auto Loan Program. Eligible borrowers have monthly payments up to 40% lower than conventional auto loans with minimal down payment requirements.
Remember to celebrate your progress at regular intervals no matter where you are on your financial journey. This can keep you motivated to achieve future goals.