Change is a vital part of life, but it can also be largely out of our control. When you initially finance your vehicle, you’re looking for a payment method that accommodates your current situation. But jobs, relationships, and the economy all experience change over time. As a result, you might be trapped making monthly payments that are no longer mesh with your lifestyle.
Fortunately, Northside Auto Sales is here with five steps you can take to lower your monthly car payments. Many of these suggestions involve tips to finance your vehicle before purchase. All are designed to save you the maximum amount for the remainder of your loan term.
Refinancing is one of the most typical methods of securing a lower monthly payment. We touched on life changes that can adversely affect you – but on the flip side, unexpected positive developments can occur. For example, if your credit score has increased since you took out the original loan, you should be able to qualify for lower interest rates. If you’re attempting to refinance and multiple lenders have calculated your rate as the same (or worse) as your original rate, it might be time to look into elongating your loan term. Speaking of...
By negotiating for a longer loan term, you’ll pay less each month: a 72-month loan involves smaller payments than a 60-month term, 60 months is cheaper per month than a 48-month term, and so on. This makes longer loan terms ideal if you’re living paycheck-to-paycheck. Be aware that you'll ultimately wind up paying more over the longer loan term's span due to compounding interest rates – but if your immediate focus is on surviving month-to-month, a longer loan term might give you the breathing room you need above all else right now.
If you have the means to do so, don’t be afraid to add a little extra to your initial down payment. Chances are you’ll thank yourself for it within a few months. The more money you put down up front, the less you’ll have to finance, and the lower your monthly payments will be. This, in turn, leads to less total interest. It may hurt in the short term to put down $2,000 on a $10,000 loan – but when you factor in the accumulated interest you’ll ultimately be avoiding, all you’re doing is saving your future self a lot of money.
One surefire way to lower your interest rate? Shop for a low interest rate at the outset. Auto loan APRs vary based on your credit history, but they can also depend on what lender you’re working with. Before purchase, do your research to make sure you’re getting a reasonable APR figure. According to Experian’s State of the Automotive Finance Market Report for the third quarter of 2023, the average interest rate for a used vehicle is 11.35% (up from 9.38% a year ago). Follow market trends and carefully consider whether you want to invest more than the average rate.
Want to pay the lowest amount possible each month? How does zero dollars sound? Well, it’s simple – all you need to do is sell you vehicle. Unloading your vehicle is the one foolproof way to get rid of monthly car payments altogether. As long as the car’s value covers the rest of the loan, you’ll start anew with a fresh slate – and this time, you’ll be able to enter the car buying process with our pre–financing tips in mind.
If you're considering selling or trading your current vehicle, Northside is the place to take it. With our Kelly Blue Book Instant Cash Offer, we'll turn your old car, truck, or SUV into cash or trade-in credit. And while you’re here, we’ll help you finance your next vehicle once your find it amongst our diverse inventory. Positive change happens at Greer's number one used dealership, Northside Auto Sales: where your financially secure future begins.