Change is a vital part of life, but it’s also something that’s largely out of our control. When you initially finance your vehicle, you’re looking for the best way to accommodate your current lifestyle. But jobs, relationships, and the economy all change over time, and you might be stuck making monthly payments that are no longer in your best interest.
Fortunately, Charge-A-Car is here with steps you can take to lower your monthly car payments. Many of these suggestions involve tips to finance your vehicle before purchase. All are designed to save you the maximum amount for the remainder of your loan term.
Refinance Your Car
Refinancing is one of the most practical and common methods of securing a lower monthly payment. We touched on life changes that can adversely affect you – but there can of course come positive change as well! For example, if your credit score has increased since you took out the original loan, you should be able to qualify for lower interest rates. If you’re attempting to refinance and multiple lenders have calculated your rate as the same (or worse) as your original rate, it might be time to look into elongating your loan term. Speaking of…
Extend Your Loan Term
By negotiating for a longer loan term, you’ll pay less each month: a 72-month loan involves smaller payments than a 60-month term, 60 months is cheaper per month than a 48-month term, and so on. This makes longer loan terms ideal if you’re living paycheck-to-paycheck. You will ultimately wind up paying more over the duration of your longer loan term due to compounding interest rates – but if your immediate focus is on surviving month-to-month, a longer loan term might give you the breathing room you need above all else right now.
Put More Money Down
If you have the means to do so, don’t be afraid to add a little extra to your initial down payment. Chances are you’ll thank yourself for it within a few months. The more money you put down up front, the less you’ll have to finance, and the lower your monthly payments will be. This, in turn, leads to less total interest. It may hurt in the short term to put down $2,000 on a $10,000 loan – but when you factor in the accumulated interest you’ll ultimately be avoiding, all you’re doing is saving your future self a lot of money.
Find the Lowest APR
One surefire way to lower your interest rate? Shop for a low interest rate at the outset. Auto loan APRs vary based on your credit history, but they can also depend on what lender you’re working with. Before purchase, do your research to make sure you’re getting a reasonable APR figure. According to Experian’s State of the Automotive Finance Market Report for the third quarter of 2023, the average interest rate for a used vehicle is 11.35% (up from 9.38% a year ago). Follow market trends and carefully consider whether you want to invest more than the average rate.
Sell or Trade Your Car
Want to pay the lowest amount possible each month? How does zero dollars sound? Well, it’s simple – all you need to do is sell your vehicle! Selling your vehicle is the one foolproof way to get rid of monthly car payments altogether. As long as the car’s value covers the rest of the loan, you’ll start anew with a fresh slate – and this time, you’ll be able to enter the car buying process with our pre–financing tips in mind.
If you’re looking to trade in your vehicle, Charge-A-Car is the place to go. We’ll draw you up a fast, free estimate of what we’d pay for it. And while you’re here, browse our inventory for your next vehicle, which we’ll help you finance on the spot! Give in to change and discover what a more financially secure future looks like here at Aurora’s used car headquarters.