Cars cost a lot of money to buy, own and operate, so drivers welcome any effort to cut costs, especially when the economy is slow. Although money savings doesn’t always drop into the motorist’s lap, a little effort can result in impressive cost reductions. The following tips offer auto owners some good ways to keep car payments low.
Work Down Payment Magic
When buyers finance a car loan, the entire amount accrues interest. By making a down payment of 20 percent or more, buyers can substantially reduce the dollar amount of a loan. This reduces interest costs over the term of the loan, potentially saving thousands of dollars. Actual savings will vary depending on the length of a loan, interest rate, and the size of the down payment.
Avoid the Trade-in Scene
Drivers who want to save the most on a car purchase should consider selling their old car themselves rather than relying on questionable dealer trade-in programs. Buyers can often get more for their car, giving them extra cash that can go toward a bigger down payment.
Buy Authorized Used Cars
Many manufacturers operate their own used-car certification program that gives buyers a chance to buy almost-new cars with warranty coverage at significant discounts over showroom-new cars. Through these special used car programs, buyers can save thousands.
Shoppers who arrange their auto financing with their bank, credit or finance company in advance know how much they can spend, so they can stay within budget. Also, they can often lock in better rates than dealer finance specialists can offer.
Avoid Lengthy Loans
Car owners can reduce their payments by taking a loan with more payments. While spreading out a loan over longer time can help cash flow, it increases the amount of interest paid on a loan and could cause the auto owner to go upside down.
Renegotiate a Loan
Auto owners who got into a bad loan can often renegotiate the terms of their contract if they have a good payment record. As an alternative, they can shop for opportunities to refinance with another financial institution.