There are a multitude of factors that go into the total cost of owning a car. In addition to the sticker price, owners must think about insurance rates, the rising cost of fuel, and a drop in value when it comes time to resell. Another issue to consider is your car loan. Interest rates, terms, and conditions can vary considerably among lenders. It’s worth taking the time to compare all options to find the best deal on financing. By following these tips, you can save hundreds or even thousands of dollars over time.
1. Buy an Affordable Car
One of the first ways to lower loan payments is to purchase a car that you can really afford. Although this seems obvious, it’s advice that is not taken often enough. It’s tempting to purchase a car beyond your means with the lure of available financing, but this can come back to be a serious burden over the next few years. Take your time to compare cars at Motoring or other top review websites, and decide whether or not you need a brand new car or could settle for something slightly used.
2. Avoid Taking out a Small Loan
If you’ve found a great deal on a used car and only need to borrow a couple of thousand dollars to make your purchase, it’s probably worth waiting and saving your money if possible. Although small loans are easier to repay, the bank will charge you a higher rate of interest to make the short term loan worth their while. It’s better to dip into savings if you can afford it rather than settle for these higher interest rates.
3. Look beyond the Dealership
You may have found the perfect Subaru Forester reviewed by Motoring at your local dealership, and are ready to buy. The car dealer can be a great first point of contact when it comes to discussing financing, but they shouldn’t be your only one. Just as the Subaru dealer is acting as a middle man in the purchase of a car, they also serve as a middle man when it comes to offering financial products. As such, they won’t be able to necessarily offer you the best deal. It’s a good idea to shop around both for your car and for the best deal on financing.
4. Consider Refinancing
Whether you’re finding it difficult to keep up with car repayments or wish to pay off your loan faster, it could be worth your while to refinance the loan. If your financial circumstances change, you can apply to reduce your interest rates and potentially pay off your loan at a faster rate.
5. Make Sure Credit is in Top Shape
A major purchase like a car is something that often can’t wait. But if you have time on your hands and less than perfect credit, you could potentially put off this purchase until you’ve cleaned up your credit score. Even the difference of a few points can lead to a savings of hundreds of dollars. This is because many lenders have strict formulas to issue loans based on credit scores.
These are just a few issues to consider when you’re looking for ways to save money on your car loan repayments. By taking your time and researching all options carefully, you can improve your chances of finding an affordable financing package.