5 Ways You Can Make Your Car Payments Cheaper

5 Ways You Can Make Your Car Payments Cheaper

Posted on August 17, 2022

If you need a new car but are unsure you can afford an auto loan, there are other options. There are ways to make a loan more affordable or alternatives to buying a car.

We asked our Dundas auto loans team to discuss 5 different ways to make a car loan more affordable. This is what they came up with.

1.   Improve your credit score

Regardless of how you pay for your car, your credit score will influence how affordable it is. A good credit score reduces the amount of interest you’ll pay on an auto loan and can positively impact a lease agreement so is well worth doing.

It takes time, but simple things like checking your credit report for errors, paying down debts as much as possible, ensuring rent and bill payments appear on your payment history and using a credit card regularly while settling the balance each month can all help.

2.   Find the Goldilocks loan amount

Small loans tend to attract higher interest rates as the lender will still want to make a profit. Longer loans will be more expensive over the term because you’re paying interest over many more months.

Try to find a loan amount where the interest drops without putting your finances under strain. Then try to find a loan term that keeps monthly payments sensible without being overly long.

3.   Refinance your current auto loan

Interest rates vary depending on the overall economic situation and your credit score. If rates are lower now than before or your score is higher, refinancing could save you money.

It doesn’t work for everyone and is better if you have been paying the loan for a year or two, but it can work. Look at loan rates, get prequalified and see how much you could save. If the saving is worth the time it takes to apply for the loan, it might be a good idea.

4.   Lease instead of buy

Even though we’re car finance guys, we appreciate that leasing can work better than owning for some. If you don’t drive many miles, are the type to keep their vehicle in good condition and don’t mind not owning the car, they work well.

Leasing means no servicing and maintenance costs, the ability to drive a new car every couple of years and lower monthly payments, so there is definitely something to recommend it.

5.   Buy used instead of new

Despite used cars being more expensive than ever, they are still much cheaper than driving new. If you’re looking to minimize outlay, buying a car that’s 2-3 years old should get you a relatively new model with the latest technology, just with a few miles on it.

Buy a certified used car and you’ll get a warranty, full mechanical inspection and the reassurance that the car has been fully checked by experienced technicians.

Those are 5 practical ways we know of to lower the cost of paying for a car while still getting a new car. Each delivers a different experience and different savings but all will cost less than a traditional auto loan!

When you’re ready for a car lease or loan, get in touch with the Dundas auto loan experts at Northway Ford for great deals on auto finance.

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