How to lower your car payment in 2022

The average payment for a new car reaching $648 per month according to Experian, many drivers are thinking about how to reduce 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 auto 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 might feel obligated to pay the same amount for your car each 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 your payments, the first option is to talk to your lender. Beyond that, you can refinance your car, sell it, or trade it in.

Negotiate with your current lender

You should contact your current lender first if you are having difficulty 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 you just want to save money and aren’t having financial hardship, the lender probably won’t lower your car payment.

Refinance your car

Another good option for reducing your car payment is to refinance your loan. A refinance auto loan replaces your original loan with a new one. In the ideal scenario, you would get a lower interest rate, which could lower your car payment and save you money on the total interest.

However, if your rate is about the same or worse, you will need to extend the term of your loan to reduce your monthly car payment. This means that you would take longer to pay off your remaining principal, which would increase the total interest you would pay. We don’t recommend doing this because you could be upset about the loan owing more on your car than it’s worth.

Sell ​​your car or trade it in

Of course, you won’t get a car payment if you don’t have a car. Although it’s not feasible for everyone, selling your car is a way to completely get rid of the car payment. Make sure the value of your car 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 less than what you have on your current car loan, you’ll likely save money on car payments each month. If you have equity in your car beyond what’s owed on the loan, you can use that plus a down payment to pay for a used car without taking out a second loan at all.

How to get rid of a car payment

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

  • Sell ​​your vehicle
  • Repay the loan early
  • Return your car to the lender through a voluntary repossession
  • Trade in your car and pay for the next vehicle with cash and any equity above your loan balance

How to Avoid Paying Interest on a Car Loan

If you have excellent credit, you may be eligible for 0% APR car loans for specific durations. You must pay the full balance within this time to avoid paying interest. If you can’t get one of these offers, you can minimize the interest you pay by making extra payments and paying off the loan early.

Will my car payment decrease if I pay extra?

Your monthly car payment won’t decrease if you make additional payments because each loan payment stays the same for the life of the loan. But you’ll pay off the loan sooner and save money on interest. Some lenders have prepayment penalties, so check them out first.

How to get a lower payment on a new car

If you’re considering buying a new car, you have some control over how much you pay. The total loan amount is the most important factor in your monthly car payment. This is followed by the interest rate you are approved for and the loan term you choose. Here are some ways to have lower car payments on a future purchase.

Buy the lowest APRs

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

Auto loan APRs vary depending on your credit history, but they also vary quite a bit depending on the lender you work with. We recommend comparing a handful of prequalifiers when shopping for a new or used car loan.

You can also complete multiple auto loan applications within a certain time frame and difficult applications will be combined into one on your credit report. This time frame is 45 days for FICO® credit scoring models and 14 days for Vantage models.

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

Choose a minimum loan amount

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

Maybe you can 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 smartest choice for lowering your car payment on your next vehicle.

Deposit more money

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

If you put down 20%, you will finance $8,000 and your monthly payment will be $147.33. You would also save over $100 in interest. The short-term pain of putting more money aside rewards you with the long-term gain of lower monthly car payments and less total interest.

Get a longer loan term (but know the risks)

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

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


Knowing how to lower your car payment can help you free up money in your monthly budget to use for other expenses. However, keep in mind that a lower monthly payment in the short term can cost you more over time. Know your options and your repayment amount before taking on a new loan, especially if your credit isn’t the best. We recommend that you compare companies to find the best car loan rates for your situation.

Our recommendations for auto loan refinancing

If you’re looking to refinance your auto loan and lower your car payment, consider working with refinance comparison websites. These allow you to obtain several prequalifications at the same time. Our top picks in this category are Auto Approve and myAutoloan.

Automatic approval: first choice for refinancing

Automatic approval works with a network of lenders like credit unions, banks, and dealerships to provide refinance loan deals. Borrowers with the best credit can get rates as low as 2.25%. Since Auto Approve specializes in refinancing, their customer service staff knows how to handle any refinance 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 rate option

With myPrêtAutopotential borrowers can find new and used auto loan deals, refinance loans, private party loans and lease buyouts. Getting a better interest rate is key to lowering auto loan payments, and if you have a decent credit score, it’s a good idea to check out myAutoloan. The company’s network of lenders can offer rates as low as 3.99% for new vehicle loans and 1.99% for auto refinance loans. The company has a Average rating of 4.3 stars Trustpilot reviewers.

How to lower a car payment: FAQ

Our Methodology

Because consumers rely on us to provide unbiased and accurate information, we’ve created a comprehensive rating system to formulate our ranking of the best car loan companies. We’ve collected data on dozens of loan providers to score companies on a wide range of ranking factors. The end result was an overall score for each vendor, with the companies scoring the most points at the top of the list.

Here are the factors taken into account by our assessments:

  • Reputation (30% of total score): Our research team considered ratings from industry experts and each lender’s years in business to assign this rating.
  • Availability (20% of total score): Companies that cover a variety of circumstances are more likely to meet the needs of borrowers.
  • Loan details (15% of total score): We considered the loan types, terms and loan amounts available from each lender to determine this score.
  • Prices (25% of the total score): Auto loan providers with low APRs scored 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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