Getting your own set of wheels is a very rewarding experience. But even so, a high monthly car payment can be a burden to your wallet. To reduce the burden, here are some ways to cut your car loan repayments:
With a good credit score you can secure a lower interest rate, and with a lower interest rate, you will have a lower car loan repayment.
If you have a bad credit history, there are still ways to recover from it. Start paying your bills on time, don't make loan enquiries, keep credit card balances low, and pay off debts.
Demonstrating good financial habits and financial stability to financial institutions can help prove to them that you are not a risky borrower. To get an idea of what your credit score is, you can visit the following websites:
They will be able to give your credit report for free.
Another way to reduce the size of your regular car loan repayment is by adding a balloon payment at the end. A balloon payment is a lump sum owed to the financial institution that you will need to pay at the end of the loan term. This larger lump sum reduces your regular repayments and coincides with the time when you may trade the vehicle in and receive some cash for it which you can then use to pay off the loan.
A bigger car loan deposit may be difficult to save up for, but if you manage to put down a larger initial deposit, you will be able to reduce the money you need to borrow. This will leave you with lower car loan repayments.
There are pros and cons when you decide to stretch out your car loan term. The main pro is that it can reduce the size of each of your car loan repayments. However, it will increase the total amount of interest you have to pay on your car loan.
If you think you can’t support your current car loan repayment, you can ask your financial institution if it’s possible to extend your car loan term.
You can also explore our car loan calculator to get an estimate of your car loan repayments. To use this calculator, you just need to indicate the value of the car, interest rate, loan term, initial deposit, and the balloon payment.
Tags: car loans
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