How to Reduce Auto Loan Payments

Consumers who buy a new or used vehicle may not always be able to make their monthly payments. They may have been offered a bad deal with a high interest rate and now need to find ways to lower their monthly payments. Other buyers may have had more money when they originally bought their cars, but unexpected financial setbacks may have affected their ability to pay on time every month. These consumers have some homework to do as they choose the best option for their individual situations.

Instructions

1

Read your auto loan paperwork and highlight your current interest rate. If your current monthly payment is too high for you to comfortably pay on time every month, the bank or loan company can help you refinance your current loan.

2

Call your loan company and ask what your current payoff amount is. If you want to try for a lower interest rate, the loan company will pull your credit score; if your credit is good, you may qualify for a lower interest rate. Decide if you want to extend the term of your loan, or ask for a lower interest rate with a refinance loan.

3

Explain your financial situation to the loan officer and ask if the loan company can help you by refinancing your loan. If it agrees to do so, a refinancing loan pays off the old loan. You are starting at the beginning, as if you had just purchased your car. The loan company may extend the term of your loan or may lower your interest rate.

4

Make larger payments and ask to have them applied to the principal of your car loan. This makes your interest rate shrink more quickly and brings your principal balance down more quickly as well.

5

Consolidate your car loan payment with other loans you have, both secured and unsecured. With a consolidated loan, you make one lump-sum payment, meaning you can pay off your car faster.