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Lower Your Car Payments with O1ne Mortgage

In the third quarter of 2022, the average balance on a car loan was $22,612, reflecting a 7.7% increase from the previous year, according to Experian data. If you’re looking to reduce your car payments, O1ne Mortgage is here to help. Call us at 213-732-3074 for any mortgage-related needs.

1. Improve Your Credit Score

Before applying for a loan, check your credit score. A higher score can lead to lower annual percentage rates (APR) and monthly payments. For instance, a $30,000 auto loan with a 60-month term can have significantly different payments based on your credit score. A score of 550 might result in an APR of 14.1% and a monthly payment of $669.60, while a score of 820 could lower the APR to 5.18% and the monthly payment to $568.61. That’s a difference of over $100 a month and more than $6,000 over the loan term.

2. Compare Car Loans

To secure the best deal, compare offers from multiple lenders. Consider the interest rate, APR, and monthly payment estimates. The interest rate is the cost of borrowing money, while the APR includes both the interest rate and any fees, giving a clearer picture of the total borrowing cost.

3. Pick a Longer Loan Term

Opting for a longer loan term, such as 72 months instead of 60, can reduce your monthly payment. However, keep in mind that a longer term may result in paying more interest over time and your car losing value faster than you pay off the loan.

4. Make a Bigger Down Payment

A larger down payment means borrowing less money, which can lower your monthly payments. Aim for at least 20% of the purchase price for a new car and 10% for a used car. Saving up for a bigger down payment can significantly reduce your monthly financial burden.

5. Choose a Less Expensive Car

Selecting a less expensive car can also lower your monthly payments. For example, choosing a small luxury SUV priced around $35,000 instead of a full-size luxury SUV priced at $80,000 can make a substantial difference in your monthly budget.

6. Buy a Used Car

Purchasing a used car can save you thousands of dollars and lower your monthly payments. Experian data shows that the average loan for a new car was $41,665 in the third quarter of 2022, compared to $28,506 for a used car. The average monthly payment was $700 for a new car and $525 for a used car, a difference of $175 per month.

7. Lease a Car

Leasing a car generally results in lower monthly payments compared to buying. However, keep in mind that you won’t own the car at the end of the lease period, which means you won’t have a vehicle to sell or trade in.

8. Refinance Your Car Loan

If your credit score has improved since you took out your car loan, refinancing at a lower interest rate can reduce your monthly payments. Refinancing involves getting a new loan to pay off your current one, ideally with better terms.

The Bottom Line

There are several ways to lower your car payments, from improving your credit score and making a larger down payment to buying a less expensive car or refinancing your loan. For expert advice and assistance, contact O1ne Mortgage at 213-732-3074. We’re here to help you achieve your financial goals.

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