7 ways to lower your car payments

7 ways to lower your car payments

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Editor’s note: This story originally appeared in Penny Horder.

$47,148.

This is the average price for a new car now, according to Kelly Blue Book. This is the second highest price on record – only matched by the December 2021 average.

Auto payments follow the same trend, with the average monthly payment reaching an all-time high of $730, according to Cox Automotive and Moody Analytics.

With the shortage of computer chips continuing to affect production, it doesn’t look like car prices are starting to fall any time soon.

For most vehicle owners, this means making the most of what they already have. One way to do this is to lower your current car payments until the car market becomes more budget friendly.

1. Refinancing

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This is perhaps the most obvious choice, but it makes sense if you’re looking to lower your car payments in the long run.

While you’re at it, you may be able to get a file lower interest rate like that. Interest rates have likely gone up since you bought your car. On the other hand, your Balance level It might also have gone up.

Checking out refinancing options may be helpful. However, keep in mind that longer term means more interest paid over the life of the car loan.

2. Car loan renegotiation

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Your lender may allow you to defer one or two payments if you need to get past a short-term hardship. However, if you need some long-term help, you can talk to your lender about car loan restructuring.

They may allow you to extend the term or lower your interest rate, which makes more sense if you have good credit.

Remember: a longer term means you will pay more interest in the long run.

3. Sell the car

Happy car owner
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You might consider taking advantage of this hot auto market for Sell ​​your car And look for a cheaper option to get what you want. Or maybe you can live in a one-car home now that telecommuting is more common.

By buying a cheaper car, you can lower your car payments — or be without — and use those savings for other priorities, like saving for a new car in the future.

4. Trade in the car

Shady car salesman
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Dealers need inventory right now and are likely to pay a premium for your used car. Take it and let them make an offer, bearing in mind that you might want to get something for paying an affordable monthly car in return.

Before you go, make sure you know how much you owe – you want to get at least that much trade off – and how much the car is worth. You can get a good trade estimate through Kelly Blue Book.

5. Additional payments

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Make an extra monthly payment for your car when you can help you pay off the loan faster and pay less interest. But it also reduces your monthly payment in the long run and may even allow you to skip some payments entirely.

One way to do this might be to get an annual tax refund and pay a lump sum for your car loan.

6. Make a bigger down payment

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If you already have a car payment, this obviously will not help you. But it is something to consider for future purchases.

Just like with a mortgage, the more you initially paid, the lower your payments will be over the life of the car loan.

For example, if you pay $5,000 down payment for a $25,000 car with 7% sales tax and 4.5% APR, you’ll end up paying $405 per month for the car on a $20,000 loan.

With no down payment and those same terms, you will have a monthly payment of $499.

7. Rent your car

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Yes you can rent your car. This makes sense especially if you live in a larger metropolitan area with out-of-town visitors. Maybe settle in for the weekend and let one of these tourists rent your car – save some money by staying and let your trip earn you keep for a few days. You can even offer your car as rental when you travel instead of paying the parking fee at the airport.

On the car sharing site Toro, a 2020 Nissan Altima at $60 a day, while a 2016 BMW 4-Series for $95 a day. The site offers everything from a basic Toyota sedan to an open-air Subaru or Jeep – all the way to an expensive Porsche or Lamborghini.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click on links in our Stories.

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