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How To Lower Your Car Payment

Updated on May 26, 2011
Make your car loan affordable
Make your car loan affordable

A lot of car owners are finding themselves in a tough financial position, inflation, job loss, increase in mortgage, another mouth to feed. A car is very important to many people. Depending on where you live, without a car, there is no way to get to work, drive the kids to school or even go food shopping. There are ways to change your car payment to lower the amount you have to pay each month and keep your car payment affordable.

First and foremost, call your lending company BEFORE you are behind on payments. Do not let them call you looking for their money or even worse do not try to negotiate once the repo man makes an appearance. The lending company will be much less likely to believe you. They will think you are saying whatever you need to say to keep your car and scam them. Call them as soon as you have a change in circumstances. They would rather extend the length of your loan than own another car. Many lenders will ask you to write a letter stating your hardship. Go into detail; leave nothing out. Do not feel embarrassed, everyone trips once in a while. Many times it is the circumstances and not your intention to have a problem with your car payment.

If your car loan company will not work with you, consider going for a personal loan. Credit Unions usually have the lowest rates. A benefit of getting a personal loan is technically the car is paid off, so you can raise your insurance deductibles, which lowers your insurance premiums. You will end up saving on both the interest rate and the insurance.

Search for loan companies that specialize in auto refinance. Usually this option is for cars that are fairly new or still have a high resale value. Usually, the car has to be worth twice the loan amount. Rates vary between lenders, be sure to check out many. Compare the rates, terms and conditions.

As a last resort or maybe a first resort, only you will know. Trade in the car and buy a cheaper more affordable. Choose a car that a dealer is willing to warranty or you may end up spending the savings with the local mechanic.

If you live in an area that has a good, reliable and extensive mass transit system, sell the car and take advantage of the mass transit. No, it's not free, but it is cheaper than owning a car.

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