If you are trying to maintain a budget, monthly auto loan payments are always a major concern. No one really wants to make a car payment every month. However, the reality is that most people simply can’t afford to pay cash for a vehicle. Besides that, if you are able to obtain a low car loan interest rate, it actually makes sense to finance and save your cash for other purposes. So, if you do need to make monthly car payments, you will want to keep them as low as possible. With that in mind, here are some tips on how to keep your monthly auto loan payments to a minimum.
One of the surest ways to keep your car payments as low as possible is to take care of your credit and ensure your credit score remains in tact. Never overextend yourself with unnecessary personal loans or needless credit card spending. Use credit only when you need it and always make your payments on time.
Low credit scores will always result in higher interest rates for car loans. Higher interest rates can add thousands of dollars to a new car purchase and increase monthly car payments by as much as $100 or $200 per month. People with good credit scores always qualify for the lowest rates and will have the lowest car payments.
If you want to ensure your monthly auto loan payment falls well within your budget and ability to pay, save enough money to provide a substantial down payment. The more cash you pay down on a vehicle, the lower your monthly payments will be.
If you want to see just how much a larger cash payment will affect your car payments, search online for car loan calculators and use them to figure out monthly payments. You will quickly discover that even adding as little as $500 or $1,000 to a down payment will considerably lower your monthly car payments.
Regardless of your credit situation, you should always shop for the lowest interest rates on car loans. If you have excellent credit, poor credit or no credit at all, it doesn’t matter – always get loan quotes from at least three or four different lenders and choose the loan option that is the most affordable.
As mentioned above, you should always strive to keep your credit in as good a shape as possible. However, things happen and people do go through difficult times – but, that doesn’t mean you have to accept the first interest rate that a lender offers you. Always shop around.
If keeping your monthly car payment as low as possible is truly your foremost concern, you may want to consider extending the length of the repayment terms. Instead of choosing a shorter 36 or 48 month term, opt for longer terms of 60 months or even 72 months.
Although you will pay more in interest charges, using this technique will allow you to lower your monthly payment somewhat. If your situation improves and you are able to make higher payments, you can always apply extra payments to the loan principle to help reduce finance charges.