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How to Lower Your Car Loan Payment

Tips to lower your monthly car payments.

Need or want to lower your car loan payment? Whether you’re feeling financial stress or simply looking for ways to improve your cash flow, lowering your car payment is a good strategy.

The average car payments in America is $554 according to Experian. That’s a sizable amount of anyone’s income. What can you do to lower your car payments?

Talk to your lender

Your current lender may have a program that can temporarily lower your car payments. Some credit unions also offer loan modifications without refinancing for members facing financial hardships. The first step is always reaching out to the current lender to determine what they can offer you.

Sell your car

If the car payment is impossible to make and you’re unable to make a deal with the lender or refinance, the next option would be to sell the vehicle. However, you’ll need to make sure you can sell the car for the amount of the loan to pay off in full.

Refinance your loan

Refinancing is a good option for those with excellent credit scores. You may benefit from lower rates in the current market. It’s also a great option if you had less than perfect credit and have worked to improve your score.

Ask your existing lender about current car refinancing rates and shop around as well. Choosing a credit union is often a very good option for many people.

Credit Scores and Refinancing

Your credit score determines the car loan interest rate. Lowering your interest rates will save you money and thus keep you on track of paying it off. Financial companies however look at this purely through statistics and risk base modeling. In some situations having a low credit score can make it difficult to refinance.

So, how can you lower your car loan payment through refinancing? Do the following to increase the likelihood you’ll get approved.

Check your credit report

Pull your credit report at least 3 months before you plan to refinance. Review the report to make sure information is accurate and dispute and remove negative information. Use free credit score apps to get your credit score to give you a good idea of where you fall in the score range. If you discover inaccuracies in your credit report, dispute the information with the credit bureau. You’ll want to fix all credit issues before refinancing.

Check the value of your car

Go on KBB to see how much your car is worth. Cars depreciate in value significantly. You might have an auto loan of $20,000 for a car valued at $17,000. In order to qualify for a refinance, you may need to have money upfront to cover the difference.

Shop around for rates

Start with a credit union and ask about refinancing options. Many credit unions have competitive used auto loan rates.

If you are worried about the number of credit inquiries impacting your credit score, don’t worry too much.

The scoring algorithms, primarily FICO, aggregates all loan applications for cars as one inquiry during a 30 day period. It understands you are shopping for the best rate so you will not be penalized. “FICO Scores ignore mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping.”

Make Extra Cash for Car Payments

Fortunately, there are many options to make extra cash with your car. You can choose to use your car to make food and package deliveries, drive others where they need to be, and even rent your car.

Check the financial marketplace for more ideas on how to make cash with your car.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of and His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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