Whether you are in the market to buy a new set of wheels or you are interested in refinancing your existing vehicle, you may have your eye focused on one key figure. The monthly payment associated with your auto loan is your regular financial obligation related to your loan. Many car owners and car buyers are most concerned with finding a car loan with a manageable monthly payment rather than other factors like the term of their auto loan. So what steps can you take today to reduce your monthly auto loan payment?
Review Your Credit Rating
Before you start shopping for a new or used car loan, you may consider pulling a free credit report from the three credit reporting agencies. You are entitled to receive one free credit report per year from each of these three bureaus. Lenders will use your credit rating to determine your interest rate. However, not all of the information on a credit report may be accurate. By reviewing your credit rating today, you can ensure that all information on the report is accurate. If you find any false or incorrect information, you can take measures to correct that information before applying for your new loan. This step can help to ensure you qualify for the best auto loan interest rate possible.
Shop For Interest Rates
Car loan interest rates can vary from lender to lender. Take time to shop around to find the best interest rate possible. Shopping online for auto loan rates is a fast, convenient way to identify which lenders will provide you with the best rate possible.
Extend Your Loan Term
If your goal is to keep your monthly loan payment as low as possible, you may consider extending your loan term. It is common to find a loan term as long as 72 months on a new car loan. The term offered on used car loans may be limited to 48 months by most lenders. A longer loan term will yield lower monthly payments. However, you should keep in mind that this will affect how quickly you can pay off your loan.
Further, opting for a longer loan term may result in higher total loan costs. This is because you will be paying interest charges on your loan for a more extended period. If your main concern is finding a monthly payment that is manageable for your budget, these downsides may be factors that you may be willing to live with.
Lower Your Loan Amount
Lowering your monthly payment can also be accomplished by lowering your auto loan amount.
But, how is this accomplished?
To lower your loan amount on the purchase of a new or used car, you can put more money into the purchase as a down payment. You can also consider buying a more affordable car with a lower sales price. If you are refinancing your car loan, you can consider paying off a portion of the balance owed with a lump sum payment.
Your auto loan payment will be a regular fixture in your monthly budget for several years.
With this in mind, it does make sense to take steps to lower your monthly payment. Consider putting these tips into practice today to lower your auto loan payment.