Take Control Over Your Monthly Finances: How to Lower Your Monthly Car Loan Payments

Are you feeling the pinch in your monthly budget? With inflation, you can expect to see many if not most of your monthly bills going up, but there’s one monthly expense you might be able to lower: your car payment.

Here are some ways to lower your car payment so you can find a little room in your budget.

Car Loan Refinancing

Car loan refinancing is the most reliable way to lower your car payment. Car loan refinancing pays off your old car loan and gives you a new one that might have better terms. At iLending, people reduce their monthly car loan payments by an average of $145.

Car loan refinancing is particularly effective if your situation has improved in some ways since you first financed the car. You will most likely be able to lower your car loan payments if you have:

• Improved your credit
• Increased your income
• Paid off other debts

With these changes, you might not just lower your monthly payment. You might be able to get a lower interest rate, which can reduce the overall cost of your loan.

You might also be able to get a lower interest rate if you didn’t bargain hard on your initial loan. If your current interest rate is 6% or more and you have decent credit, the odds are very good that you’ll be able to get a better one with car loan refinancing.

However, even if you don’t see much of a reduction in car loan payments, car loan refinancing typically covers the cost of fees – you will usually save more than you pay – and you can potentially skip a payment when you transition from the old loan to the new.

Talk to Your Lender

Your loan terms are laid out in your contract. You can’t just change them by asking – or demanding – that your lender change them. However, you can sometimes get a short-term reprieve if you are facing a temporary shortfall.

Your lender made an investment in your loan, and it is usually to their benefit if you pay that loan off in full. To make that happen, they are often prepared to make concessions such as letting you postpone a payment or pay a little less for a few months. Although you will have to make up the difference later, and you might owe additional interest, this might be better than missing car loan payments and accruing fines.

Downsize Your Ride

Sometimes the problem is that you purchased too much car and need to find something more modest for your current needs. You can do this by selling your current car and getting a new one.

Before you decide to sell your current car, contact your lender and ask how much you will have to pay on the current loan. You do not want to sell your current car for less than this, except in a limited situation, we’ll discuss in a moment.

You have three options for selling your car:

• Sell directly to a buyer
• Sell to a used car dealer
• Trade in on a new purchase

You are most likely to get the best value selling your car directly to a buyer. However, this takes the most work. Advertise on peer-to-peer sales sites like Craigslist for more than you need to pay off the loan. With the current used car shortage, you might actually be able to turn a small profit, but don’t accept less than you need.

You can also sell to used car dealers. With the rise of online resellers, there is more demand for used cars, and fewer expectations that you have to buy to be able to sell. And, with the aforementioned used car shortage, even the local lots are more in the market for your car. However, dealers are looking to make their own profit, so you might find it harder to get what you need for your car.

You are likely to get the least value for your current car if you trade it in. However, this might be the best option if you’re “underwater” on your loan (you owe more than the car is worth). This is the only case where you might accept less than you need to pay off the old car loan because you can sometimes roll the extra into your new loan. With good terms, and an appropriately downsized vehicle, you might still be able to lower your monthly car loan payments even with the roll-in.

Let iLending Help

If you like your car, but not the monthly payment, iLending may be able to help you keep your car and get a permanently lower monthly payment. Our customers reduce their car loan payments an average of $145 a month, and sometimes more. Read savings stories to see the life-changing difference car loan refinancing  with iLending can make.

At iLending, we make car loan refinancing easy and hassle free. Contact us today to start the process.

What would you do with an extra $132* in your pocket?