How to lower your car payment in 2022

Achieved with the average new car payment $648 per month According to Experian, many drivers are thinking about ways to lower car payments. The good news is that there are ways to lower your car payment, whether you’ve had a loan for a few months or a few years.

Refinancing is one of the easiest ways to get a lower car payment. We at the Home Media Review Team have compared the best Refinance car loan Companies to help drivers find the right options. In this article, we’ll cover a few ways to lower your car payment, including refinancing.

How to lower your car payment

You may feel like you have to pay the same amount for your car every month. But there are a few things you can do to lower your car payment depending on your situation. If you’re having trouble making payments, the first option is to talk to your lender. You can also refinance, sell or trade in your car.

Negotiate with your current lender

You should contact your current lender first if you are having trouble making your car payments. Your lender may be able to give you a temporary forbearance or work with you to lower your payment for a short time. However, if all you want to do is save money and you don’t have financial difficulties, the lender probably won’t lower your car payment.

Refinance your car

Another good option for lowering your car payment is to refinance your loan. A Refinance car loan replaces your original loan with a new one. Ideally, you’ll get a lower interest rate, which could lower your car payment and save you money on overall interest.

However, if your rate is about the same or worse, you’ll need to extend your loan term to lower your monthly car payment. This means it would take you longer to repay your remaining principal and that would increase the overall interest you would pay. We don’t recommend this as you could be left on your head with the loan owing your car more than it’s worth.

Sell ​​or trade in your car

Of course there is no car payment if you don’t have a car. While it’s not feasible for everyone, selling your car is one way to get rid of the car payment altogether. Make sure your car’s value covers the rest of the loan. Otherwise, you will have to pay the difference in cash or finance it with a personal loan.

Another option is to trade in your car for a cheaper one. As long as you end up financing a smaller amount than you have on your current car loan, you’re likely saving money on car payments every month. If you have equity in your car over and above the loan debt, you can use that plus a down payment to pay for a used car without ever having to take out a second loan.

How to get rid of a car payment

If you want to get rid of your payment entirely, there are a few things you can do. You can get out of your car loan if you:

  • Sell ​​your vehicle
  • Pay off the loan early
  • Hand over your car to the lender through voluntary return
  • Trade in your car and pay for the next vehicle with cash and equity over your loan balance

How to avoid paying interest on a car loan

If you have excellent credit, you may qualify Car loans with 0% APR for certain terms. You must pay off the entire balance within this period in order to avoid interest. If you don’t get one of these offers, you can minimize the interest you pay by making additional payments and prepaying the loan.

Will my car payment go down if I pay extra?

Your monthly car installment does not go down as you make additional payments because each installment of the loan stays the same for the life of the loan. In return, you pay off the loan earlier and save on interest. Some lenders provide prepayment penalties, so check those first.

How to get a lower payment for a new car

If you’re considering buying a new car, you have some control over what your payment will be. The total loan amount is the biggest factor in your monthly car payment. This is followed by your approved interest rate and your chosen loan term. Here are some ways to get lower car payments on a future purchase.

Shop for the lowest APR

According to Experian’s “State of the Automotive Finance Market” report, the average annual percentage rate (APR) for the first quarter of 2022 was 4.07% for a new car loan and 8.62% for a used car loan. The APR combines the interest rate with all fees annualized over the loan life and represents the total cost of borrowing.

APRs for car loans vary based on your credit rating, but also on the lender you work with. We recommend comparing a handful of pre-qualifications when looking for a new or used car loan.

You can also fill out multiple car loan applications within a given time frame and the tough requests will be combined into one on your credit report. This period is 45 days for FICO® credit scoring models and 14 days for Vantage models.

Here are the average APRs by creditworthiness for new and used cars, according to Experian’s report:

Choose a minimum loan amount

It’s exciting to dream about the latest features and interfaces, but if you want a low monthly car rate, we recommend borrowing as little money as possible. In other words, choose an affordable car.

You might get by with a used one jeep Wrangler Sport instead of a new four-door Rubicon, for example. A well-maintained and reliable used car is the wisest choice to lower your car payment for your next vehicle.

Bet more money

Another important part of your monthly expenses is your down payment. The more money you invest, the less you have to finance. Let’s say you pay 10% on a $10,000 loan at 4% APR for 60 months. You would fund $9,000 and your monthly payment would be $165.75.

If you put down 20%, you would fund $8,000 and your monthly payment would be $147.33. You would also save more than $100 in interest. The short-term pain of investing more money rewards you with a long-term gain in lower monthly car payments and less overall interest.

Get a Longer Loan Term (But Know the Risks)

There’s another option to consider when figuring out how to lower your car payment with a new loan. If you choose a longer loan term, all other things being equal, you pay less per month. So, a 60-month term has lower payments than a 48-month term, while a 72-month term has even lower payments than a 60-month term.

However, longer terms always cost more overall unless you can get a lower rate or pay a larger down payment. Financing $10,000 at 4% APR for 48 months will cost you $837.95 in interest. However, funding the same $10,000 at 4% APR for 72 months will cost you $1,264.53 in interest. The problem is exacerbated when you are financing larger sums of money or have a higher interest rate.


Knowing how to lower your car payment can free up some money in your monthly budget to use on other expenses. However, remember that a lower monthly payment in the short term can cost you more over time. Research your options and payout amount before agreeing to any new loan, especially if your credit history is not the best. We recommend comparing companies to find them best car loan rates for your situation.

Our recommendations for refinancing car loans

If you want to refinance your car loan and reduce your car payment, you should consider working with refinance comparison websites. These allow you to get multiple prequalifications at the same time. Our top picks in this category are Auto Approve and myAutoloan.

Automatic approval: top choice for refinancing

Approve automatically works with a network of lenders such as credit unions, banks and dealers to provide refinance loan offerings. Borrowers with the best credit ratings can get interest rates as low as 2.25%. Because Auto Approve specializes in refinancing, its customer service representatives know how to handle any refinancing situation. The company has many positive reviews on Trustpilot, where it has an average rating of 4.7 out of 5.0 stars.

MyAutoloan: Best Low Interest Rate Option

With my car loanpotential borrowers find offers for new and used car loans, refinance loans, private party loan and hire purchase. A better interest rate is key to lowering car loan payments and if you have decent credit it’s a good idea to check out myAutoloan. The company’s network of lenders can offer interest rates as low as 3.99% for new car loans and 1.99% for auto refinance loans. The company has one 4.3 star average rating from Trustpilot reviewers.

How to lower a car payment: FAQ

Our methodology

Because consumers rely on us to provide objective and accurate information, we have developed a comprehensive rating system to formulate our ranking of the best car loan companies. We collected data on dozens of loan originators to rank the companies based on a variety of ranking factors. The end result was an overall rating for each vendor, with the companies with the most points topping the list.

Here are the factors our reviews take into account:

  • Reputation (30% of total score): Our research team considered industry expert reviews and each lender’s fiscal year to generate this score.
  • Availability (20% of total score): Companies that cover a variety of life circumstances are more likely to meet borrowers’ needs.
  • Loan details (15% of total score): We considered the types of loans, terms, and loan amounts available from each lender to determine this score.
  • Prizes (25% of total points): Auto loan providers with low APRs scored the highest in this category. Available discounts have also been taken into account.
  • Customer Experience (10% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.

*Data correct at time of publication.

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