Few things are more exciting than getting a brand new car. That being said, you don’t want to let your excitement blind you to taking steps to reduce your car payment. There are a few strategies we recommend for reducing the overall cost of car loans.
BOOST YOUR CREDIT SCORE
If you’re still a few months away from buying your car, do everything you can to improve your credit score, even if you feel you already have a good score. Every extra point you add helps to minimize you as a risk and maximizes your savings on your loan.
EXTEND THE LENGTH OF YOUR LOAN
You’ll likely have the option of choosing a seven-year car loan. Even if you can pay your car off faster, a longer loan term is a great way to lower your monthly payments. With this fact in mind, know that your longer terms are likely to result in higher interest over the life of your loan. Only you can decide if this sounds like an ideal situation if it means you can easily afford your monthly payment. S
AVE UP A LARGER DOWN PAYMENT
It’s best that you save up as much as possible to cover your initial down payment. The more you save, the less you have to borrow and the lower your monthly payments will be. If this means being saddled with your old wheels for a few extra months, it could very well be worth it in the long run. It’s always best to focus on long-term gains over the short-term sacrifices.
BUY A LESS EXPENSIVE CAR
It’s always best to buy well within your means. While a less expensive car may not be as flashy and luxurious as a top-of-the-line ride, the less expensive car may be better for your future finances. After all, no one wants to spend a majority of their money on a car payment. Do everything you can to lower your car payment as much as possible before signing any documents. A little foresight can save you a lot of money.