In today's tough economy, many people are looking for any way possible to save money. However, one area they forget to look at is their car payment. The great news is that with a little effort you can save money on your car payment. Whether you are looking to buy or are already have a car loan, here are a few tips that can help you keep a little more cash in your pocket.
Play HardballCar dealerships are just as hurt as anybody else by the economy and if you have good enough credit, you can negotiate great loan terms. If you have good enough credit or have a substantial down payment, do not be afraid to push for a zero interest loan. You may have to waive any rebates or other deals, but in the long-run, having zero interest on a loan is the much better option.
Avoid Trade-InsIf you are looking to get rid of your current car in exchange for a new one, sell it yourself rather than trading it in. In the majority of all cases, you will earn more by selling it yourself, so avoid trade-ins if at all possible. Then, use the money you made from the sale of your old car as a down payment for your new car.
Shop AroundShop around, even if you think you found the perfect vehicle, take a day or two to see what else is out there and the prices. If you find similar vehicles at two different car dealerships, see which terms offer you better financial benefits. One way dealership's have been making car loans more attractive is by extending the terms of the loan, so the monthly payment is lower. However, a smaller monthly payment does not necessarily mean saving more money if it has a higher interest rate than the other loan.
Auto RefinancingRefinancing is an excellent option if you already have an existing car loan. Auto rates have consistently been falling and they are now at a historic low. Generally, refinancing your vehicle loan can save you money in two ways. The first is by lowering the interest you pay on the loan which leaves more of your money going towards the principle. The second way is many times when refinancing, you can often obtain a longer term which will lower your monthly car payment. Even someone who borrowed for an auto loan six months ago may benefit from refinancing. The best thing to do is to start researching auto refinance rates from various lenders. If you have a loan directly through your dealer, you may be able to get better auto refinance rates from a bank or credit union.
Adjust TermsIf you have a current auto loan that it is in good standing and already has the lowest interest rate you qualify for, you may be able to negotiate with your lender to extend the term of your loan. This should be considered carefully as you do not want to end up with an upside down loan, or a loan that you owe more on than what the vehicle is worth. However, if your financial situation has recently changed, it is an option. The longer the term of your loan is, the smaller your monthly car payment will be.
Researching every aspect of both the vehicle you buy and any auto loan is essential to avoid wasting thousands of dollars. It can take many years to pay off an auto loan, so take your time, read all small print, shop around for the best rates and you potentially save thousands on your car loan.