Saving money on your car can be tricky, especially if you are locked into an auto loan. Paying every month on a car that is now too expensive can be difficult after one’s financial circumstances have changed. Fortunately, there are ways to reduce the burden of a car loan that has become too difficult to pay.
Many people use auto loans to finance a car purchase, and many of these loans take years to pay off. Oftentimes, a loan is taken out for a car when someone has a good job and few financial obligations, but over the years the loan becomes more difficult to make payments on. Fortunately, there are ways to reduce this payment.
Refinancing a car loan is a good option for anyone who needs to save money on their monthly car payment. Auto refinance rates are currently at historic lows, and many people have found that the rates they can get today are lower than the auto refinance rates that were available as little as six months ago. In general, auto loan refinancing can save a consumers money in two ways. Refinancing an auto loan will usually not only give a consumer a lower interest rate (which lowers the amount of interest that they have to pay each month), but it can also stretch out the period of time over which a person will make payments on the vehicle.
For example, a person with a nine percent interest rate on a five year auto loan may have made their payments on time for two years. With three years left on the loan, however, that person may have their hours cut at work, making it necessary to cut back on their monthly expenses. By refinancing their auto loan, they could not only get a rate closer to five percent, but their payments could be stretched out over five years instead of the remaining three. A person could theoretically save hundreds of dollars a month by refinancing their auto loan.
Of course, this will mean that a person will probably hold on to the car longer, making it necessary to take good care of the vehicle in order to insure that maintenance problems will be minimized. Make sure to keep up with regular maintenance on the vehicle, but save money by reading your owner’s manual and looking for deals and specials on the maintenance that your vehicle requires. There are frequent specials on new tires, belts, and oil changes; making it easier to plan and budget for maintenance expenses.
Finally, you should carefully research finance options and the reliability of available cars before purchasing your next vehicle. The decision to purchase a vehicle involves thousands of dollars, and can affect a person’s life for years. As such, it is necessary to really research the options available. Choosing a car based on looks or a salesman’s pitch is one of the quickest ways to waste thousands of dollars on this area of your budget. Consider the features that are most important to you, the average maintenance and fuel expenses of the vehicle, and the total cost of the car before deciding to buy.