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Top 4 Ways to Get a Lower Monthly Car Payment

Finance | 12/13/2021 23:00

When money is tight or you're hoping to make a big purchase, every penny counts. Whether you're trying to save up for something big, looking to put more money where it matters, or cutting back in leaner times, lowering your expenses can help.

That means, when you're going through your budget, you may want to figure out where you can save a few dollars. For many people, a car payment is one of the heftier bills they pay each month. If that's the case for you, lowering your car payment could be the answer to your financial challenges.

Whether you need a temporary fix or a long term solution, there are tons of great options out there to secure a lower monthly car payment.

Here are the four best ways to get a lower monthly car payment

1. Talk to your lender

Lenders are in the business of making money, and they can only make money when you make your payments. You may be surprised that many lenders are willing to work with people to help them manage their payments more effectively.

They may allow you to skip a payment or lower your payments temporarily. Keep in mind that interest will still accrue during this time, but it is always better to defer and have this accumulate than to have missed payments, late fees, and the negative credit impacts that will occur without deferment.

That said, not all lenders are magnanimous, and they'll rarely want to cut a deal that doesn't benefit them in the end, so while you may be able to skip a payment or lower your monthly cost, you may end up paying more interest in the long run if you go this route.

2. Refinance your car

Refinancing can lower your monthly car payments in a number of ways and might be your best option to effectively and sustainably reduce your monthly payments

Since refinancing benefits both you and your new lender, it's a win-win – they don't need to make more money than your current lender, so you're more likely to get a deal that'll cost you less overall. Here's how.

You can get a lower interest rate

One of the main benefits of refinancing is securing a lower APR. There are several reasons you might be able to get a better interest rate this time around.

  • You didn’t get a good deal on your original loan. If you went in to look for a car and got talked into dealership financing, there's a good chance you got stuck with a higher-than-average APR. If this sounds familiar, refinancing might lower your APR significantly and cut your payments drastically.

  • Interest rates in general have dropped. Interest rates fluctuate based on how the economy is performing. If you bought your car while rates were high, there’s a good chance you are eligible for a lower APR if you refinance.

  • Your credit score has improved. If your credit has improved since you first bought your car, you are probably eligible for a much lower rate. Your credit score is the most important item in your application, and an improvement in credit can yield a drastically better interest rate.

You can lengthen your repayment period

Even if you are not eligible for a lower interest rate, refinancing can still reduce your monthly payments by changing your repayment schedule. If you lengthen your repayment period (for example from 36 months to 48 months) your balance will be paid over a longer period of time and your payments will be lower. Keep in mind you will be paying more interest overall, as you will pay interest for 48 months instead of 36 months, but it will drastically reduce your monthly payments.

You can add a co-borrower

When you refinance, you can add a co-signer to your loan and possibly reduce your interest rate and secure better terms. If your co-borrower has good credit, they will be eligible for a better interest rate. 

If refinancing sounds like a good option for you, Auto Approve can streamline this process and help you start saving money today. We work as your advocates to get you the best rates possible.

Why Auto Approve? Click here to find out.

3. Sell Your Car

If you need a more permanent solution than talking with your lender will provide, and refinancing isn’t an option, you might need to consider a new set of wheels. You can either trade in your car to a dealership or sell the car on your own.

Almost all dealerships will accept trade-ins and can put you in a car that will have lower monthly payments. Make sure you talk to the dealership and are upfront about what you can and cannot afford. 

You can also choose to sell the car privately. This is a bit more work than going to a dealership, but you will probably get more money for your car. If you want to sell your car on your own, be sure to clean your car very well, get good pictures, and make sure maintenance records are up to date. You want to make your car as attractive as possible to increase the amount of money you can make.

Whether you sell to a dealership or to a private buyer, be sure to know two things before starting this process:

  • How much you owe. Know how much money is left on your loan balance, and how much you need to sell the car for in order to break even.

  • How much your car is worth. Go to Kelley Blue Book or Edmunds to look up the value of your car. It might be worth more than you think and you don’t want to lose out on money that could be yours.

4. Lease a Car Instead

If you have sold your car but still need to get around, getting a lease instead of purchasing a new car might be a good option. Leases are generally cheaper than buying a new car, as you are only paying for the depreciation that accrues during your use. There are three main leases you can pursue:

  • New Car Lease – This is the most common type of lease and is widely available. You typically need pretty good credit and a down payment to secure a new car lease.

  • Used Car Lease – These are not as common as new leases but they are out there if you do your research. The APR might be a bit higher, but since the car is not worth as much you might have lower payments than if you got a new car lease.

  • Lease Takeover – This occurs when someone wants to get out of their existing lease for one reason or another. Websites like LeaseTrader.com and SwapALease.com provide a space for you to shop around for a lease takeover. Some people who are desperate to get out of their existing leases may even offer cash incentives, making this a good option if money is particularly tight. You will still need to go through an application and credit check, but you can probably secure a nicer car for a lower rate than if you were to get a new car lease.

And those are our top tips for lowering your monthly car payment!

In times of economic uncertainty, budgeting and saving money is incredibly important. If you are struggling to make ends meet every month, consider one of the options above.

And if refinancing seems like the right option for you, or you want to find out just how much refinancing could lower your monthly payment, Auto Approve is here for you. All it takes is a few clicks and to get a quote and get on your way to more money in your pocket and less on your vehicle payments.


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*APR and Fees Disclosure: Auto Approve works to find you the best Annual Percentage Rate (APR), which is based on factors like your credit history, vehicle and desired payment terms. Fees to complete your loan refinance vary by state and lender; they generally include admin fees, doc fees, DMV and title. Advertised 6.24% APR based on: 2019 model year or newer vehicle, 730 minimum FICO credit score, and loan term up to 72 months. All loans subject to credit and lender approval.
Auto Approve has an A+ rating with the BBB and is located at 2860 Vicksburg Lane North Plymouth, MN 55447. Auto Approve works to find its customers the best terms and APR, which are based on factors like credit history, vehicle, and desired payment terms. Loan amounts, costs, and fees vary by state and lender; they generally include admin fees, doc fees, DMV, and title fees, depending on the lender and period of repayment. There is no fee to obtain a quote and all refinancing-related costs are included in the amount financed so there are no out-of-pocket costs! For more information, please go to AutoApprove.com.