 TITLE: Can You Pay More on Your Car Payment? CONTENT: What to Consider Before Paying Extra\n------------------------------------\nBefore you pay extra on your car loan, however, it's important to consider these questions:\n*   **Does your lender allow extra payments?** Some auto lenders prohibit early repayment altogether. Others charge prepayment penalties, which can eliminate any savings from making extra payments. Check with your lender to find out what your loan terms allow.\n*   **Do you have other, higher interest debt?** In general, auto loan interest rates are fairly low compared with, say, credit card debt. For example, the average credit card interest rate is currently 17.86%, while the average interest rate for a 60-month new-car loan is 4.73%. If you have extra money, use it to pay down high interest debt before tackling low interest debt.\n*   **How will making extra car payments affect your budget?** Make sure the extra payments won't stretch your budget to the breaking point. If you end up short of cash, you might be tempted to put expenses on your credit card, creating high interest debt.\n*   **Could this money be put to better use?** Depending on your current needs and future plans, there may be more productive uses for your money than paying extra on a car loan. For instance, you might want to increase your 401(k) contribution, build up an emergency savings fund or start saving for a down payment on a home. END