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3 min read published 30 January 2023
Writer: Kellye Guinan. Written by personal and Business Finance Contributor

Kellye Guinan is a freelance editor and writer with more than five years ' experience within personal finances. She is also a full-time employee at the library in her town where she helps her community access information about financial literacy, as well as other subjects.







The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances by providing concise, well-studied information that breaks down otherwise complex topics into manageable bites.









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A high could be a drain on your finances. There are a few ways to lower it by refinancing. And if you haven't taken out a loan but, you could start off with a low monthly installment by comparing and finding the perfect lender. 4 methods to reduce the cost of your current car auto payment isn't set in to stone. It's subject to change depending on the circumstances. You just have to contact your lender or take additional steps to make it easier. 1. Renegotiate your loan conditions Lenders usually allow this when you're facing financial hardship. This can ease the stress off for a few months, but it can cause you to pay more in the long run due to the fact that interest accrues during deferment. You can also request a . Your lender might be willing to extend your loan termthat means you pay higher interest, or decrease your interest rate. This is more beneficial for saving you cash over your loan period, but it could be challenging to get a loan if you don't have good credit. 2. Refinance your car loan There are two methods that can help reduce your monthly payments. You can get a lower interest rate while keeping the same terms on your current loan, which means that you pay less per month. Or you can at a longer loan duration. This will make your monthly payments lower but you'll have to pay higher interest in the long run. 3. Trade or sell your vehicle If the price of your car is priced higher than your budget, you may trade it in and transfer to a less expensive vehicle. The most convenient way will be to in at an auto dealer. You'll be able to use that extra cash as an investment for your next vehicle and will not need to handle a private sale. However, private sales could earn you more cash. But be aware that the process isn't easy. Speak to your lender to make sure that you aren't violating the conditions of your contract. 4. When you can, making extra payments can lower your monthly payments , or even skip them altogether. Although many lenders make extra payments to only interest, you might be able to ask that yours be sent direct to the principal. This will help reduce the total amount you have to pay. This can also provide you with the flexibility you need to pay for your future. How to lower your cost of a car before you buy to get a low amount of payment for your next vehicle. It is not necessary to accept the first loan that is offered, but keeping your financing is a great option in order to lower your monthly cost down, too. Purchase a second-hand car. Not only is it lower in cost upfront, but can also help you stay clear of the drastic decrease in value that new cars are prone to. Make a large down payment if possible. The lower your down payment, the less you'll require financing which will mean lower monthly payments. Trade in your current vehicle or sell it privately. Making use of your current car to help increase you down payments is a fantastic option to keep your monthly payment affordable. Improve your credit score before you apply for an loan. Dealers and lenders will offer you loans if you have good or outstanding credit. If you can, wait to purchase a car until your credit score has increased just a few points. Shop around for the best financing. Do not limit yourself to the dealer's financing. It is more likely that you will be finding a great rate of interest as well as an affordable monthly payment by shopping around. Opt for a longer loan period, but bear in mind that it means more paid in interest. While you'll be able to reduce your monthly costs but you'll pay more than what your car is worth by having a loan duration of more than 60 months. Pay sales tax upfront. Lenders will let you pay the tax on your car, but you should not try to. You'll end up paying interest on it too -- and it will just make your monthly payment bigger. Lease instead of buying. Leasing gets a bad rap however, it is possible to do so make a profit with a lease. But, it could be expensive if your don't have a good credit score -- and you won't be able to sell your vehicle after the expiration of your lease period. The bottom line Because cars should not make up more than 25% of your total and therefore, it's essential to ensure that your monthly payments remain low. Refinancing or renegotiating is two of the best solutions when you've taken out an loan with a very high interest rate. But switching to a more moderate vehicle is also an excellent option to bring more cash into your account each month. If you're on , consider the and save up your down payment prior to shopping. It will cost you less interest and get started with a lower monthly installment.


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Written by Business and personal finance contributor

Kellye Guinan is a freelance editor and writer who has more than five years of experience in personal finance. She also works full-time as a librarian at the local library where she helps the community gain access to information on financial literacy, among other topics.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping their readers gain the confidence to take control of their finances through providing precise, well-studied information that breaks down complicated subjects into digestible pieces.






Auto loans editor




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