When you’re looking to buy your next vehicle, the last thing on your mind should be how much it will cost you each month. But if you’re a responsible driver, that figure is essential in deciding whether this purchase is right for you. Fortunately, there are plenty of ways to get a lower car payment than advertised as the standard price. Scroll down to learn how to get a lower car payment:
Pay down current debts
If you carry a balance on credit cards, student loans, or auto loans, paying off these debts can save you thousands of dollars in interest payments. If you can’t afford to pay off all your debt and want to impact your budget significantly, focus on the debt with the highest interest rate first (typically credit cards). Another option for reducing debt is refinancing your loan. Many lenders offer lower rates if they believe it will help them collect more from you over time.
“A down payment may not be necessary to get a car loan, but borrowers when applying for auto loan funding, among other auto loan criteria, are typically required to present proof of identity and income,” explains Lantern by SoFi experts.
Keep your credit score high
Your credit score is a number that represents your creditworthiness. It’s calculated by software that looks at the information in your credit report and compares it with similar lenders. A high score means you’re less likely to default on a loan, so when lenders see that, they will give you lower interest rates and less-stringent terms. Low scores can make it difficult for you to get loans or credit cards and may even result in higher interest rates from creditors who don’t want to take a chance on lending money to someone with a poor history of paying back debts.
Minimize fees and add-ons
The dealer will try to sell you a bunch of extras that are not required, like extended service plans and warranties. Many of these extras can be purchased elsewhere at a lower price, so ask the dealer what they would charge if you bought your car elsewhere. Some dealerships give customers who buy directly from them huge discounts on these items to get them into their showrooms. Ensure that any add-ons are paid for as part of your loan rather than added to your monthly payment. That way, they will only increase your monthly debt burden as much over time, too (which means less interest paid).
Lease to own
If you’re looking for a lower car payment, consider leasing to own. This is an excellent option if you need more cash to buy a car outright or if your credit score needs to be higher to qualify for a loan. Leasing-to-own allows you to drive away with the vehicle at no cost and pay only for the difference between what you owe and its value at the lease end.
It’s important to remember that your car payment is just one of many monthly expenses. When it comes down to it, the amount of money you pay each month for your car loan isn’t as significant as how much you’re spending on other things like rent and utilities. If you can keep those costs low enough so they’re not eating up too much of your paycheck each month, you’ll have more room in your budget for a higher car payment without feeling unmanageable.