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How to Lower Car Payments
If it is important to you to have low monthly car payments this article will provide you with some good ways to lower your payments. Of course, they don't fit everyone's situation and you may find many of them inapplicable to your needs, but you may also find the solution that is just what you are looking for.
Bad Ways to Lower Car Payments
Let's start with the ways that you should avoid despite the fact that they can lower your payments.
A very common method for lowering monthly payments is extending the car loan term. Instead of 36 months, many car buyers choose a loan term of 48 months, 60 months, or even 72 months. However, you will not have any equity in your car until you get at least two-thirds through the car payment schedule and it is very likely that you get upside-down on your car loan. Additionally, you will pay a much bigger amount of money in interest.
Another way to have lower monthly payments is to lease the car instead of buying it. Is this really a solution, though? Surely you will have a much expensive car than your financial situation would allow but at the end of the lease you will have nothing... well, except for a penalty for the extra miles you have driven in some cases.
Ways That Require Time and Dedication
If you don't have a very good credit score you will probably get higher interest rate on your auto loan. Therefore, it is recommended to wait till you improve your credit before you apply for a car loan. A better credit score will get you lower interest rate and consequently lower monthly payments.
Well, if you are really not in a hurry to buy a car, you could also save money in order to pay cash. Just think of all the money you will save in interest.
Good Ways to Reduce Your Car Payments
One of the best ways to reduce your monthly car payment is to make a bigger down payment. The larger down payment will eliminate that risk of getting upside-down on your loan. Additionally, you will need smaller amount of money for the car financing which will get you lower monthly car payments and of course saved money from interest.
Another way is to buy a used car. Surely, everyone wants a high-end new model, but just think of the significant depreciation of your new car's value which starts the very minute you drive it off the car lot. Buying a used car will save you from getting an upside-down car loan since the car has already depreciated in value. It is worth less and you pay less for the car loan payments. Not to mention that you can get a really great deal if you buy a certified used car, or also known as a Certified Pre-Owned (CPO).
The information and interactive car payment calculators that are provided on this site are made available as general assistant guidance in regards to car loans and payments. We do not guarantee that any information or calculations will be accurate or applicable to your personal financial situation, circumstances, or objectives. Accordingly, before making any final decisions we encourage you to consult a qualified professional and get personalized advice.
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