How to Lower Your Car Payment

For many, the new year means taking a closer look at finances and budgeting accordingly. By doing this, you may realize that you need to cut back on some of your monthly expenses — and according to recent studies, transportation costs are the second-largest category of expenses for the average American.

If you’re looking to improve your budget this year, lowering your monthly car payment could help you save money and relieve some of your financial stress. Let’s take a closer look at how to lower your car payment — both before and after you’ve purchased a vehicle! 

How to Lower Your Car Payment Before You Buy

Of course, one of the easiest ways to lower your car payment is to do it before you purchase a vehicle. If you’re shopping for a loan and looking for a better monthly fee than what you’re being offered, here are three simple ways to get a lower car payment. 

1. Shop Around for the Best Loan

Similar to how you might shop around for the perfect car, you can also do the same thing as you’re looking for a loan. There are many different ways to obtain an auto loan, including a bank, credit union, online lender, or car dealership. Be sure to shop around and compare the key factors that affect your monthly car payment, such as the loan amount, annual percentage rate, and length of the term. This will ensure you’re getting the best offer possible while also helping you save money down the road.

Related: A Step-by-Step Guide to Financing Your Next Car

2. Choose a Longer Loan Term

By choosing a longer loan term and stretching your payments out over a more extended period, you will be able to reduce your monthly payments. However, doing this can also cause you to pay more interest in the long run. Interest can quickly add up — and the longer it takes you to pay off your loan, the more it will accumulate over time. Ultimately, it is up to you to decide what is more important to you: lower monthly car payments or less accrued interest. 

3. Make a Down Payment

There are several benefits of putting a down payment on a car, including a shorter loan term, less accumulated interest, and offsetting depreciation. However, lowering your monthly payment is perhaps one of the top benefits of putting money down on a car. Making a significant down payment will reduce the amount of money you’ll have to borrow — and as a result, your monthly costs will also be lower. 

Click here to use our payment calculator and discover how various factors like down payment, interest rate, and length of a loan term will affect your monthly payments. 

How to Lower Your Car Payment After You Buy

If you already have a car loan but you’re struggling to pay it off each month, there are several ways to lower your current payment, too. Below are three options to consider. 

1. Speak With Your Lender

If you’re behind on your current auto loan or at risk of missing a payment, it is important to discuss your situation with your lender. Perhaps an unexpected life event has taken a toll on your finances, or maybe you or your partner have recently become unemployed. Regardless of the reason, this situation isn’t uncommon — so don’t be ashamed if you are temporarily having trouble making payments. If you are honest with your lender about your circumstances, they may be able to work with you to help you get back on track. 

2. Refinance Your Loan

One of the best ways to lower your car payment is to refinance your existing auto loan. This is especially helpful if interest rates have dropped or your credit has improved since you got your original loan. To refinance your loan, you’ll need to find another lender and reapply for a new one altogether. Doing this could help you get a loan with better terms or a lower interest rate, which will ultimately help reduce your monthly payments. 

3. Trade-in Your Car

If you’re still having trouble with your payments, trading in your car for a lower-priced vehicle is another option to consider. When you trade in your car at a dealership, its current value is subtracted from the price of the vehicle you are purchasing. However, before doing this, you’ll need to determine whether you have positive or negative equity. This is the difference between your car’s current trade-in value and the amount you still owe on its loan. If your loan balance is less than the car is worth, you have positive equity and may be able to trade it in for a cheaper vehicle to reduce your payments. 

Learn More: How to Trade in a Car With an Existing Loan

Financing Your Car at Battleground Kia

Whether you’re struggling to make payments on your current vehicle or you’re shopping for a loan that has better terms, there are ways to save money in the long run. Lowering your car payment is an effective way to free up cash in your monthly budget and relieve some of your financial stress. 

Now that you know how to lower your car payment, it’s time to get started. At Battleground Kia, we provide competitive financing rates and terms on our large selection of vehicles. Click the button below to get in touch with us and apply for financing through our dealership’s finance center.