How to Lower Your Car Payment

1. Refinance your auto loan

If interest rates have fallen or your credit score has improved since you bought the car, refinancing can lower both your rate and payment. Keep the term similar or shorter to avoid paying more total interest.

2. Extend the loan term

Refinancing into a longer term lowers the monthly payment, but you usually pay more interest over time. This can be a useful short-term relief, but it is not the cheapest long-term strategy.

3. Make a larger down payment next time

The less you borrow, the lower your payment. Saving even a few extra thousand dollars before buying can make a noticeable difference in your monthly budget.

4. Choose a less expensive vehicle

A lower sticker price means a smaller loan. Consider a reliable used car or a less expensive trim level to bring your payment down without stretching the term.

5. Improve your credit score

A higher score unlocks lower APRs. Pay bills on time, reduce credit card balances, and avoid new credit applications before car shopping.

6. Remove unnecessary add-ons

Extended warranties, gap insurance, and protection packages can be rolled into the loan, increasing the payment. Review your contract and cancel items you do not need if the terms allow.

7. Trade in a vehicle with equity

If your current car is worth more than you owe, the positive equity can be used as a down payment on your next vehicle, lowering the financed amount.

Run the numbers

Use our car payment calculator to test how a lower rate, shorter term, or smaller loan amount changes your monthly payment.