Reducing Your Car Loan Payments: Helpful Tips

Car loan payments are a fact of life for many. It can become downright painful to have to keep up with these payments every month. Though, there are a few things you can do to reduce your loan payments. Here’s what you should keep in mind.

Can I Pre-Arrange Financing?

• If you haven’t already purchased your vehicle, then you can arrange financing before you go to the dealership. In most cases you will end up paying more for a vehicle when you finance it directly through the dealership. Try to find financing through your bank or credit union for the best possible rates. This will help keep your monthly payments lower.

Do I Need the Additional Warranties?

• When you purchase financing through a dealership, most people don’t realize that the finance managers are nothing more than sales people. You think you’ve already gone through the negotiation process over the price of the car. But now you have to listen to another form of a sales pitch. They will go over adding on additional warranties, undercoating, scotch guards, and other things. You are more relaxed during this process and more apt to say yes. It can have an affect on your monthly payment though. Most of these add-ons are unnecessary and should be avoided to keep your payments down.

What About Trade Ins?

• If you’ve already purchased your car and your payments seem a little high or out of hand, look into refinancing it. With decent credit you can refinance your car at a lower rate and generally enjoy a lower monthly payment. A refinance loan is really a new loan. One lender will pay off the existing loan and you will end up paying the new lender back. The thing to be careful of with this though is many auto loans have a condition you must pay a pre-payment penalty if you do this. This is usually the amount of interest left on the overall loan. Depending on how long you’ve chosen to finance for this penalty fee can be pretty big. Check in to these things before you look at refinancing. Refinancing is still usually a good option for those who want to shave money off the monthly payments.

Can I Trade My Car In and Help?

• If you had a great job and could afford that luxury vehicle two years ago, and now find yourself in a different situation, you can save money on your car payments by trading the car in for a less expensive model. This doesn’t sound like the most appealing solution to most people, but it doesn’t have to be a bad thing. Trading in your luxury sedan for a sedan of lesser flair can save you a lot of money every month. If you needed a huge SUV, but now can get away with a smaller one, then why not do it? A car really only needs to get us from point A to point B. Heated leather seats and surround sound stereos aren’t necessary. If you find yourself struggling to make your car payments, then this is a good option to look into.

If you are willing to take a look at what you have to work with now, there are things you can do to bring the payments down.