The pandemic has brought a lot of unexpected financial pressure on millions of people across the country. Being able to make your car payments in full and on time may now have become an unexpected burden that puts your transportation at risk. The good news is that there are options to help lower your car payment.
There are options out there to refinance auto loans at a lower interest rate with lower monthly payments or trade-in your car for a different vehicle that better suits your financial needs. Here’s some information on refinancing your auto loan vs. trading in your car and a few alternatives well.
Why should you consider Auto Refinancing?
If your vehicle is crucial to your lifestyle, or you don’t want to deal with trading in your car for a different vehicle, then you should consider refinancing.
According to Lantern by SoFi, “Depending on individual financial situations, applicants could qualify for a lower interest rate through refinancing which could mean lower monthly payments and saving money in the long run.” That said, a refinance loan is an excellent way to lower the interest rate on your car loan, which could save you a great deal of money over the life of the loan. Even a tiny percentage point of interest can help, but it’s also essential to use a loan refinance calculator tool to determine the amount of money you can save. Using a calculator will help you decide if refinancing auto loans are the best solution for your situation.
A refinance loan can also lower your car payment. While reducing the interest rate will help lower your car payment, extending the loan term can also reduce the amount of your car payment by a significant amount. However, keep in mind that you’ll pay more interest by extending the loan term.
Why should you consider Trading in your Car?
You should trade-in your car if you no longer have a desire to keep it or feel you can’t afford it. The amount of your car payment is only part of your transportation costs. Maintenance, fuel, and insurance costs should all be considered when trading in your car.
By trading in your car and purchasing a vehicle with lower insurance, maintenance, and fuel costs, you can save a great deal of money each month. If you currently own an expensive car that requires costly maintenance and gets poor gas mileage, trading in your vehicle for something more affordable maybe your best solution.
Alternatives to Loan Refinancing and Trade-in?
Refinance auto loans and trading in your car are not your only alternatives to lowering your transportation costs.
A good way to lower your car payment without trading in your vehicle is to sell it to a private buyer. When you sell your car privately, you can usually get a better deal than if you take it to a dealership.
You can also try speaking with your lender about a payment deferral. If you’re approved for a payment deferral, you could be exempt from making a payment for up to three months. Keep in mind that you still have to pay the money for months deferred and the interest.
If making your car payment is putting a lot of stress on your finances, you have options. Trading in your car or refinancing your car loan are two great ways to lower your car payment and interest rate. To get the best deal, shop around for loan refinancing to determine if you can save on your car payment. Once you’ve checked into loan refinancing, look into trade-in options to see if you can get a lower car payment with a different vehicle and new loan.