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Reduce Your Auto Loan Payment

Like most people, you’re probably interested in learning how to reduce your auto loan payment. Other than your mortgage or rent obligation, the next highest bill most consumers pay is for a vehicle.

It’s not unheard of to have vehicle payments that top $700. But if you can get that amount lowered, that leaves money to pay other bills or to pay off your vehicle faster. Here’s how to reduce your auto loan payment and pay off your car sooner:

You refinance your current payment and interest rate, swapping them for a lower rate and smaller payment. You then take that extra money you save and apply it directly to the principal of your car, thus cutting down on the length of time you’ll have to pay for it. So if you’re paying $700, approximately $200-$300 of that is going toward principal. The rest is all interest.

But if you can maybe lower that auto loan payment to say $450, that gives you an additional $250 to pay on the principal. It’s like you’re hitting that principal twice every month instead of once. So a 36-month auto loan could easily be cut in half by applying extra to the principal.

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