A recent report from the New York Federal Reserve Bank shows sates on auto loans are currently the highest they have been since 2006. Many consumers have become concerned about the growing rates. However, these averages shouldn’t deter you from taking out a car loan. There are a number of things that you can do to lower your monthly loan payments.
Negotiate With Different Lenders
Always shop around before choosing a lender. One of the beautiful things about the free market is that you can negotiate for lower prices. You can tell lenders that you were offered a lower rate somewhere else. They may respond by offering a lower rate.
Avoid Only Making Minimum Payments
One study found that 40% of people only make the minimum payments on their loans and credit cards. This may sound better over the short-term, but you will inevitably be paying much more over time. You will want to consider saving money by paying your loans off more quickly.
Interest rates can vary significantly over time. They may be at an eight year high now, but will inevitably decline in the near future. You may want to consider refinancing after rates decrease. According to CFP John Chladek, it is generally a good idea to refinance at a lower rate if you have a credit score over 740, because you will generally save money over the long-term.
Take Advantage of Early Dealer Financing Deals
Many dealers offer more favorable interest rates than traditional lenders for the first year of the loan. Some don’t even charge interest during the first year. They don’t usually lock you into the loan, so you can always try refinancing with a different lender if you fear loans will increase. Companies like Curry Hyundai tend to offer very reasonable interest rates for new buyers. You will want to speak with your dealer to see what rates they are providing.
Consider Trading in Your Vehicle
There are times that you may want to trade in your pricey vehicle for a cheaper model. However, this may not make sense if the vehicle has depreciated considerably. You will need to check the value of your car in Kelley Blue Book to see if you will save money by downgrading it.
Try to Reduce Your Loan Payments
Many people have trouble finding an affordable auto loan. Fortunately, there are a number of things that you can do to make them cheaper. Always do your due diligence before taking on a loan and try to find ways to reduce payments afterwards.