Want to free up funds that have been tied up in paying off your car loan? Learn how to lower your car payment with these suggestions.
The US vehicle finance market is expected to reach more than $1.3 trillion by 2023.
If your car loan is part of that enormous sum, you may find that it’s eating up money that you’d rather be using elsewhere.
You have a couple of options. You could try to find a way to reduce your payments, or you could try to pay off the balance a little sooner.
Whichever option you favor, read on as we look at some top tips for how to lower your car payment.
If you want your monthly repayments to be lower, then one of the best options is to try to refinance your loan.
If you find a loan with a lower interest rate, or that offers a longer term in which to pay, your monthly repayments will be reduced. Heck you can even spend a little of that savings on a fun phone casino!
To find out how much difference refinancing could make, check out this online calculator that can do the math for you.
Pay Every Two Weeks
If you want to pay your loan off more quickly, this is a really clever trick.
Instead of paying one payment a month, you pay half of that amount every two weeks. This works because aside from February, every month is longer than four weeks.
Since there are 52 weeks in a year, you’ll end up paying 26 times. Each payment is half your usual monthly amount, so over the course of a year, it will add up to the same as 13 monthly payments, not 12.
It means that every single year you’ll be paying off an extra month, without really noticing the difference.
Make An Extra Payment
A simpler way of clearing your debt earlier is to pay a larger single payment once a year.
This might be when you get a tax refund or a work bonus. When you’ve got a little extra cash, use it to pay off some of your loan. You’ll be debt-free much sooner that way.
It may hurt to spend that extra cash on a debt, but in the long run it will be worth it.
Even if your loan amount is a nice round number, once interest is added into the equation, and your monthly repayments calculated, you’ll almost always end up with a mess of dollars and cents to pay every month.
If your repayment is $263.71, for example, then try rounding it up to $270, or even $300. You won’t feel it too much from month to month, but you’ll be able to pay off your loan much more quickly.
The quicker you can pay off your loan, the less interest you may have to pay, too.
How Lower Your Car Payment Another Way
We’ve looked at some tips for how to lower your car payment, but there’s another option we didn’t discuss: trading down your car. If you sell your car and buy a cheaper model, your car payments will definitely be cheaper.
If you’re looking for advice on buying another car, then check out our car buying section. It’s packed with useful information.