Table of Contents
- 1 How To Lower Your Auto Loan Payment – Things You Should Know First
Saving money is quite popular these days and learning how to lower your car payment is no exception. Everybody is looking for ways to cut down the amount of cash they spend. For most folks, this mostly means cutting back on entertainment, going out to eat, and other luxuries. For some, saving money also means refinancing a mortgage. Seldom do people think about how to lower their car payment with bad credit. This, though, offers many benefits to individuals who need a lower car payment.
If you have bad credit and are looking for ways to save money and also improve that credit, lessening that monthly payment can reduce financial stress and even save you from defaulting on a loan. You can use that extra money to settle other debts, cover living expenses, or simply enjoy life more. Most importantly, you’ll be able to sleep like a baby at night. The ways to lower car payments that follow will provide you a roadmap to success.
How To Lower Your Auto Loan Payment – Things You Should Know First
There are some factors that go into whether or not you will actually be able to lower your car payment with bad credit. Before attempting to make that monthly amount less, you want to know what can affect your chances.
Consider the Present Market Climate
If the economy has come to a stall and business is slow, lenders will be more willing to work with you and help you lower monthly payments. Remember: if their starving for business, any client will do, even if your credit is in dire conditions. Take advantage of this. If the economy is booming, though, lenders won’t be starving for business and have more options; thus, they will not be as willing to help you if your high credit presents a risk of default. Take into account the market before you try to lessen your monthly car loan payment. What’s interesting is that you’ll have better luck in tough times to lower your auto loan payment.
Consider What’s Going on with Your Current Loan
Ask yourself if the chances of defaulting on your car loan are high. If so, you have a better chance of being able to lower your car payment. Why? It’s simple. If you default, your lender will end up losing money on the deal. Thus, if a default is impending, a lender will help you refinance or extend the loan in order to help you avoid losing the car as well as ensure they don’t lose out on the loan. It’s all about the dollars. The catch is that you are usually given a longer loan time and higher interest rates; your monthly payment may be lower, but you’ll end up paying much more in the long run.
Consider Your Car and Your Car Loan
Generally speaking, you can refinance if you currently have at least $7,000 to $8,000 dollars left on the loan. This can vary according to the type of car and dealership. Moreover, lenders also like to see that the vehicle has not exceeded 80,000 miles. This mileage limit ensures that the car is still in good shape. The loan amount minimum ensures the lender actually has motivation to help you. If helping you will only make them enough money for pens, they may not be as willing.
Ways to Lower Your Car Payment
There are several methods you can employ here to lower your car payment. You probably just wish you could wave a magic wand and say goodbye to the loan. It’s too bad you can’t. So your stuck with realistic methods. And the good news is that, even with poor credit, you have options. The most popular are to extend or refinance your loan.
Lengthen Your Borrowing Period
Like anything dealing with loans, trying to lower your car payment through a refinance has its pros and cons. The good thing is that this can easily lower your car payment each month and make your financial life much easier. You just pay over a longer period of time. This can help bring up your credit score, make it easier to get a loan for other things, and overall decrease stress in your life.
Refinance That Loan
This could save you thousands of dollars if you have managed to keep up on your car payments from the time your loan began until now. Perhaps when you purchased your car your financial situation wasn’t as good as it is now. Or perhaps it’s the opposite. Either way, you should be able to get a new deal from your lender or from another lender. You’ll have a better opportunity if your credit has improved recently. Often times, a second lender will offer a slightly lower interest rate than the first lender in order to get more business. The only way to see if you can get a better interest rate is to apply for refinancing at a number of lending institutions and compare the rates. If a bank or credit union has not been receiving a large amount of refinance applications, your chances of getting a new loan and being able to lower your car payment will be even higher.
Where You Should Apply
There are tons of lending institutions in local areas as well as online institutions that will provide a lower car payment without refinancing. The great thing about online lenders is that you can apply for free and see the new loan before you accept or decline. Before you decide on a loan, compare at least five different lender offers and see what one is the best for you. You can go online and to credit unions and banks. Consider how much you will pay over the course of your loan and what monthly amount suits your budget best. You want to be able to make payments, but you also don’t want to be paying off the car for what seems like forever.
Other Options to Lower Your Auto Loan Payment
If extending your loan or refinancing it isn’t an option or proves too difficult, you still have other options. It’s not time to cash in your chips just yet.
Consider a Lease
The good thing about a lease is that it usually entails a lower monthly amount. You typically only pay about half of the value of the car over a certain period of time. The bad thing is that you have to return the car and are left without any equity once the lease expires.
Consider Mile Rules on Your Lease
If you are currently leasing a car, getting a mile limit can help cut down the monthly payment. Dealerships do this because it makes certain the car has a higher resale value once it is returned.
Sell Your Car
This is difficult. You want to talk to the lender first. And you need a buyer that trusts you. There’s a lot more ins and outs, but it’s possible. For example, the buyer can pay off your loan and give you the remaining amount on the deal. Your lending institution then can send the title to the buyer’s lending bank or to the buyer if there is no loan involved.
Everybody’s situation is different. The market is always in fluctuation. There are a lot of factors that can influence if you are able to lower your monthly car payment or not. It’s vital that you take into account your current situation and the feasibility of extending your loan or refinancing. Make sure to consider the benefits as well as the negatives before you attempt to lower your car payment and make a decision that you can live with.How to Lower Your Car Payment with Bad Credit by Jordan L Bourland