For most people, cars are a necessary function of life. Unless you live in a city like New York, where taxi’s and other public transportation are the norms, it is likely that you will own or lease a vehicle in order to get around town and to work on a regular basis. However, car payments can be an extraordinary expense incurred by the average American who is struggling to make bills. Here are 4 ways you can look at lowering your car payment today and reclaiming some control over your financial life.
1. Consider buying used.
It is a well-known fact that the moment you drive off the lot with a brand new car, your value will plummet. That doesn’t sound like a wise financial move. Buying slightly used can save you a few thousand (at least) and protect some of the money you put in straight away. You can still finance used vehicles at great rates depending on your credit, so financing won’t be a barrier to getting in to lightly used and well-maintained vehicle.
2. Search for the best rate.
There are a ton of places where you can apply for a car loan. If you have good credit and a stable job, you will have your pick as far as where to find financing. Credit unions typically have great rates so that may be a good place to start. Sometimes dealerships run great promotions where they offer a 0% financing deal on approved credit. Just do yourself a favor and don’t buy more car than you need because you are able to get a great rate. Also be aware that spreading out your payments over an extended number of months will lower your payment, but will increase the amount you pay in interest. The money saved does not entitle you to buy a more expensive car. Use that monthly savings to save cash over time for your next car so you don’t have to finance at all. Which brings me to my next point…
3. Save your money and buy cash.
know, I know. It’s crazy. Why in the world would you give me nonsense advice like that you ask? Because it is doable and is a worthy goal. It is possible to find a running, safe car for a couple of grand. It may not necessarily be the prettiest thing in the world, but it will do the trick while you keep saving to buy something nicer. Keep saving your hard earned cash and when you have enough saved to get a car more suited to your liking, sell your cheap car, add it to your savings, and go buy up. Private sellers will be thrilled to get cash and not have to bother with waiting on you to get a loan, which could secure you a better price on the car altogether. Ever heard the saying “cash talks”? Just have a trustworthy mechanic look the car over and thoroughly inspect it for signs of wear or other issues. Buying with cash will give you the lowest payments possible- coming to zero. Nothing feels better to drive than a paid-off car.
4. Ditch your car altogether.
Again, you may think we have gone off the deep end. But hear us out. With services such as Uber and Lyft in our modern society, a ride is only a minute or two away- literally. If you don’t drive much (maybe you work from home, live close to work or near public transit) it may be worth considering- even if it is in the short term while you save to buy a car with the best deal. Owning a car comes with not just the payment, but the insurance, the maintenance, the gas, repairs- all that stuff really adds up to the true cost of ownership. Or maybe if you have 2 cars for the family you can downsize to one and get rid of payment altogether. It may be possible to have one family car and utilize creative transportation for the other person when need be. Get creative with this and see if you can downsize your needs for the time being- as well as your expenses. Short term sacrifices can make a big impact on your financial future, especially with something as expensive as a car payment.