Do you make car payments every month? So do many other Americans, and most are shelling out a few hundred bucks each month.
The average monthly car payment on a new vehicle is $523, reports Experian.
If your car payment is starting to put a strain on our monthly budget, you don’t have to continue suffering. It’s possible to reduce your monthly car payment and save hundreds, if not thousands of dollars, over the course of your auto loan. Follow along and we’ll show you two ways you could get lower car payments.
You could reduce your monthly car payment by…
Selling your car and buying a cheaper one
Selling your current car, paying off your auto loan, and buying a cheaper car with a much smaller loan could deliver the low monthly car payments you want. This option can be a little involved, though, so do the math before you make the leap.
Add up your monthly car payment, gas expenses, and car insurance. Could you be paying less across the board by driving a different or cheaper car?
Let’s say you drive a new high-end SUV. Newer cars tend to cost more to insure than older ones and larger, more luxurious vehicles tend to carry higher insurance rates than everyday sedans.
If you sell this car and buy a smaller, cheaper, more fuel-savvy vehicle, you could reduce your monthly car expenses far beyond your car loan— you’ll spend less on fuel and car insurance! And since you’ll be making payments on a smaller loan, your monthly car payments will also be lower.
Refinancing your current auto loan
Want to hold on to the car you have? We don’t blame you! Refinancing your car loan could be your best bet at lowering your monthly car payments.
Here’s how refinancing a car works. A new loan is used to pay off your existing one, with your vehicle as collateral. The refinanced loan is a new contract between you and the lender, with a potentially different interest rate, term, and monthly payment.
“If your vehicle isn’t too old, and you don’t owe more than it’s worth, you may be able to refinance,” says Credit.com’s Gerri Detweiler via Veterans United. “This is easiest to do if you got into a higher-rate loan a year or two ago and now have improved your credit scores.”
LauraKay, a myAutoloan customer, found herself in this exact situation. She was able to save $100 a month on her car payment by refinancing her car loan. That’s thousands of dollars in savings over the course of her loan.
“I was able to save almost $100 a month on my car payment,” says LauraKay. “Went from 16.75% due to my age and no credit history at the time to 3.10%.”
Refinancing your current loan may be the right idea if…
- Your credit rating has improved
- Interest rates have dropped
- Your income has changed
- You’re not happy with your current loan terms
If you’re not ready to apply to refinance your car, try myAutoloan’s auto interest rate estimator. Using your credit score and zip code, it’ll show you what interest rates people just like you have been approved for.
Take 2 minutes and you could save $2,000 or more
Apply for auto refinancing with myAutoloan to see if your monthly car payments could be lower. The process takes about 2 minutes to complete, and within seconds we’ll have you matched with up to four lenders with loan offers ready to review. That’s right! Actual loan offers from nationally recognized lenders. It’s your choice to move forward from there. Offers are fully transparent, interest rates are never marked up, and you’re never obligated to use one of our lender loans.