Did you take out a car loan in order to finance your car, and the monthly car payments are a little higher than you’d like them to be? Falling behind on auto loan payments can be stressful, overwhelming, and your car can be repossessed in the process. The following tips, however, can possibly help to lower your car payments and make them more affordable:
Downgrade your vehicle
One way you may be able to lower your car payments is by opting for something cheaper. Maybe your current vehicle was affordable when you initially purchased it, but your financial situation has changed and the car payments are just no longer working for your budget. Consider trading in your car for a less expensive option, or selling the car on your own and then buying something else. It may be a bit of a hassle, but you can drastically lower your car payments this way. You may even want to consider nixing the car loan altogether, and just buying something that you can afford to pay for in cash. You may have to settle for a car that isn’t as nice as the one you financed, but you won’t have to stress anymore about car payments.
Switch to leasing
If you don’t really want to downgrade your car, but you still need an option that can provide you with lower car payments, consider leasing. By leasing a vehicle, you are essentially “renting” it and payments for the same make and model you once owned will usually be cheaper. However, there are some negatives about leasing to keep in mind. Just like when it comes to renting a home, that money you pay each month goes nowhere and you are not building equity in an asset. Unless switching to leasing drastically lowers your car payments, this may not be a feasible option. If you do see a huge drop in your car payments, you’ll also want to consider the other limitations that go along with leasing a car, such as mileage restrictions. For many drivers, however, leasing is the ideal solution.
Refinance your car loan
Your monthly car payments could be high because of the interest rate. If your credit wasn’t that good when you initially obtained your car loan, but it has since improved, you may now qualify for a better interest rate. By refinancing your auto loan and receiving a lower rate, you’ll also see lower monthly car payments.
Talk to your lender
If you don’t qualify for a lower interest rate yet, but you’re currently struggling with your car payments, talk to your lender. If your financial situation has changed, explain what happened and ask if there is any way to lower your interest rate and car payments, even just temporarily. If your lender is willing to give you some time to catch up, it can be less burdensome and help to make your car payments manageable again.
Pay off the loan completely
Those monthly payments can seem never-ending and be nothing but a burden after a while, and it could actually be a lot less stressful on your finances and budget if you just pay off the loan completely. Even though it may mean dipping into your savings, paying off your car loan can free up that extra cash each month and can give you one less bill to worry about. If you’re struggling with your car payments though, paying it off may not be the easiest thing to do right now. However, if you’re receiving structured settlement payments, Peachtree may be able to help. We can buy some or all of your future payments, and send you your cash sooner in one lump sum. You can use that lump sum of cash to take care of a large debt, such as a car loan. Contact Peachtree Financial Solutions today for more information and to receive your free quote!
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.