Freeing up money in your budget could be as simple as reducing your monthly car payments. If you already have a car and are looking to reduce your overall debt load each month, then using one or more of the following tips can save you hundreds of dollars annually.
For those still shopping for a car, use these tips to make sure you get a low monthly payment from the start. The following strategies help you to create the best plan for lowering your car payments each month.
If you already own a car then consider refinancing your car loan. Most consumers utilize the dealership’s financing offers, but in most cases those offers include incredibly high interest rates. The best way to lower your monthly car payment, even after you drive the car from the lot, is to refinance the car with your bank or other financial organization.
In most instances, your bank can offer you a better deal than the dealerships, and if you are a good customer then discounts are often offered as well.
The other reason to consider refinancing your car is that the interest rates are lower now than they were when you bought your vehicle. Most consumers do not realize they are not locked into their financing contract.
For example, if the interest rate on the car when you purchased it was around nine percent, but now the interest rates offered by your bank are at 3.4%, the savings from refinancing are significant.
When you refinance a car loan with the goal of saving money on car payments, keep in mind that the process basically requires you to open up a new loan with different terms and rates. The bank you refinance with essentially pays off your loan to the first lender, then you make payments to them instead.
Another reason refinancing is advantageous is if your credit score has improved since purchasing your vehicle. Higher interest rates are issued to those with less than stellar credit.
If you have raised your score significantly since you purchased your vehicle, consider refinancing. The simple reduction in interest rate creates an instant savings on car payments each month.