Three Smart Ways to Lower Your Car Payment

In life, you need to be able to get where you’re going without going broke. This is no small feat these days, as your bottom line is probably already suffering from skyrocketing gas prices and inflation on every front.

When times are tough and budgets are tight, one of the easiest ways to free up money is to lower your monthly car payment. Make it happen with the following three strategies so you can free up some funds and start saving again.

1. Trade your car in for a less expensive vehicle. Before you do so, check Kelley Blue Book to find out how much your car is currently worth so you can assess whether or not the dealer is offering you a fair price for your vehicle. You also need to make sure the offer is higher than the amount you currently owe on the car so you can pay your loan off. While it may sting to trade in a beloved set of wheels for something more practical, you’ll be glad you did it when you end up with a lower monthly payment and more wiggle room in your budget!
2. Who says you need to own your vehicle? Why not opt for a lease instead? Leasing generally amounts to a long-term rental of a vehicle, and monthly payments tend to be less than what you would pay to own the same vehicle. You should know, however, that most lease agreements restrict the number of miles you can drive during the leasing period in order to minimize the wear and tear on the car. If you decide you like the car enough that you want to own it, you may be able to work out a lease-to-own agreement with the dealer. 
3. Finally, refinancing your car loan is a great way to lower your monthly payment. If you originally financed your car through the dealer, you are probably paying more for it than you would if you had secured financing through a bank or credit union. Credit unions tend to offer lower interest rates than banks when it comes to auto loans, however, so reaching out to one for refinancing is a surefire way to save.

If you can lock in a lower interest rate for your vehicle through refinancing, your new monthly payment should be better suited for your budget. You can lower your monthly payment further by opting to extend the loan term. Instead of paying for the loan over 60 months, for example, you might choose to spread out your payments over 72 months—or even 84. The more months you pay for your loan, the less you pay each month over the life of the loan. Keep in mind, however, that as you rack up interest over this extended duration, you may end up paying more than the car is actually worth. If the arrangement enables you to pay your bills better in the meantime, however, it might be worth it.

At Millstream Area Credit Union, we’re committed to helping people like you get back on track when it comes to their finances. Reach out to us today to refinance your auto loan so you can lock in a lower monthly car payment and start saving money again. We want all of our members to be able to get where they are going each day—in their vehicles and in life, too—without going broke. Get in touch with us today so you can get back in the black!