How Can You Lower Your Car Loan Payment?

Those monthly car payments can easily become hard to deal with. In fact, the average amount people pay for their car on a monthly basis in the US is anywhere from $500 to $750 a month. It’s very important to figure out ways to lower that car payment, if you can. And even if it might not seem easy to do, there are certain methods that will help with the process. Here’s what you need to focus on if you’re looking to lower that car payment.

Refinancing the loan

One of the obvious choices on how can you lower your car loan payment is to refinance the loan. That could actually help you pay less on your loan, if you manage the process adequately. An option here is to refinance the loan and choose a lower interest rate. It will keep the term, but you are paying less interest and thus you are saving money.

The other option is to refinance the loan, but choose a longer loan term. It’s a good idea if you have some financial issues, but it has a downside. You will pay less per month, yet the cost is you do pay more interest. That’s why you have to choose what you value more. In the case of most people, refinancing to choose a lower interest rate makes the most sense, and it will provide great results.

Go and renegotiate the loan terms

Many lenders are ok with you deferring payments if you are dealing with financial issues. However, you can’t rely on this all the time. Lenders will be ok with deferring a month, maybe two. But you still have to pay. It’s a good idea to try and request a loan modification. Sometimes, lenders will be fine if you want to extend the term.

Why do they agree to that? A longer term will bring more interest, and that’s certainly one of the things you have to think about here. And on top of that, they do require good credit in order to offer such benefits. So there is an upside and a downside to this, something you have to keep in mind.

Make extra payments when you can

Getting a side hustle and trying to make extra payments when possible is always a very good idea. The main focus with this kind of stuff is because you will pay off quicker, and the remaining payments will be easier to do. Maybe you had some gift money, or you received a tax refund. No matter the situation, putting those extra money into the car loan payment makes a lot of sense. Yes, it will vary from one person to the next, but addressing this in a way that’s controlled and manageable can help a lot more than you might expect.

Trade in or sell your car

There is an option here to trade in and sell your car. The idea here is that you could get the extra cash as a down payment for the next car. Or you can buy a cheaper car and use the remaining money to pay some of the remaining car loan payments. It’s definitely worth considering, especially if you are the type of person that tries to sell their car as quickly as possible and ensure they have the best possible deal.

Of course, if you plan on getting a new car loan, be aware the interest rates can change. So even if you had a good interest rate for the previous loan, the new loan might come at a time when interest rates are extremely high. It’s a great idea to try and lower your car loans as much as possible, and trading in for a new car could be the answer you are looking for.

Other things to consider

Before you buy the car and opt for a car loan, always try to assess your budget. How much are you willing to spend, is that amount ok for you, or is it going to cause financial issues? Also, check the different financing options available. All of that can help quite a bit, and it will help provide an exceptional return on investment.

Another thing you can do is to try and sell the vehicle privately, instead of trading in. You could be getting more money that can be used to tackle those car loan payments. It’s always important to tackle this type of stuff, and ensure that everything is working in an appropriate manner.

At the end of the day, all these ideas can help you lower your car loan payments. But make sure that you study the options and see what works better for you. In the end, it will help streamline your workflow, while saving a significant amount of effort.