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3 min read published January 30, 2023
Writer: Kellye Guinan. Written by Personal and Business Finance contributor
Kellye Guinan is a freelance editor and writer with more than five years ‘ experience within personal financial matters. She is also a full-time worker at her local library where she helps her community get information on financial literacy, among other subjects.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to take control of their finances through providing precise, well-researched and well-researched content that breaks down complicated subjects into digestible chunks.
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A high could be an expense to your finances. Fortunately, there are simple steps you can take to lower it by refinancing. If you’ve not taken out a loan in the past, you can begin with a lower monthly payment by shopping around and finding the perfect lender. Four ways to reduce your current car payment Your auto payment isn’t set in to stone. It can change — you just need to talk with the lender or take extra steps to manage it better. 1. Change your loan conditions Lenders often allow you to when you’re facing financial hardship. This can take the pressure off for a month or two however it could cause you to pay more in the long run since interest is accruing during deferment. You can also request an . The lender may be willing to extend the term- which means paying higher interest, or reduce the rate of interest. The latter option is best to save you cash over your loan term, but it may be difficult to qualify for if you don’t have great credit. 2. Refinance your vehicle loan There are two ways can lower the monthly cost. You can negotiate lower interest rates while keeping the same terms on your current loan, which means you pay less every month. Or you can at the same time get a longer loan duration. This can make your monthly payments lower but you’ll have to pay higher interest in the long run. 3. Sell or trade in your vehicle if it is over your budget, you can trade it in and transfer to a more affordable car. The easiest way to do this would be to go to an auto dealer. You’ll be able to use the extra cash to make a down payment on your next car and won’t have to deal with a private sale. Private sales can earn you more money. Be aware that it can be complicated. Talk to your lender to make sure that you aren’t violating the terms of your contract. 4. Make extra payments when possible can lower your monthly installments — or eliminate them completely. While many lenders apply extra payments to only interest, you may be able to request yours go directly to the principal. This can help lower the amount that you owe. This can also provide you with an opportunity to make some extra money for the future. How can you lower your car payment before buying to make a lower payment on your next vehicle. You don’t have to take the first loan that is offered, as long as you keep the loan amount down can be a good option for you to reduce your monthly expenses down, too. Purchase a second-hand car. It’s not only cheaper upfront, but it will also help you avoid the massive decrease in value that new cars are prone to. You should make a big down payment, if you are able to. The lower your down payment, the less you’ll have to finance — which means lower monthly payments. Trade in your current vehicle or even sell it privately. Making use of your current car to boost your down payment is an excellent option to keep your monthly installments affordable. Increase your credit score before you apply for a loan. Dealers and lenders will offer you when you have good or excellent credit. If you are able, hold off to purchase a car until your credit score has increased a few points. Shop around for the best financing. Don’t limit yourself to the dealer’s financing. You increase your chance of finding a great rate of interest as well as a flexible monthly payment by looking around. Opt for the longest loan duration, but keep in mind that this means higher interest rates. While you’ll be able to get your month-to-month costs down but you’ll pay more than what your car’s value by having a loan duration of more than 60 months. Pay sales tax upfront. Lenders will let you pay the tax for your vehicle , but make sure not to. You’ll be paying interest on it too — and it’ll only make your monthly payments more expensive. Lease instead of buying. Leasing is often seen as a negative thing however, it is possible to do so make a profit with a lease. However, it could be costly if you don’t have a strong credit score — and you’ll be unable to sell your car at the end of your lease period. The reason is that automobiles should make up less than 25 percent of your overall , it’s crucial to keep your monthly payment at a low level. Refinancing or renegotiating are two of the best solutions in the event that you have taken out an loan at a high interest rate. Switching to a more moderate vehicle is also an excellent option to bring more cash into your pockets each month. If you’re on , consider saving your down payment prior to shopping. It will cost you less interest and start with a low-cost monthly payment.
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Written by Business and personal finance contributor
Kellye Guinan is a freelance editor and writer with more than 5 years experience working in the field of personal financial matters. She’s also a full-time librarian at the local library, where she assists people in her community get information on financial literacy, among other topics.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping their readers gain the confidence to control their finances with clear, well-researched data that breaks otherwise complicated topics into bite-sized pieces.
Auto loans editor
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