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If you’re in the market for a new or used car, you’ve probably considered an auto loan. When you finance a vehicle, you take out a loan and pay off the car in monthly installments over a designated period of time. You also pay interest, which is the cost of borrowing money from your lender.

There are many factors that contribute to your monthly loan payment, like your credit score, the length of the loan, and the amount of money you need to borrow. Depending on your situation, car payments can get pretty expensive. In fact, the

average monthly car payment ranges from $650 to over $700 per month.

Fortunately, it’s possible to get a much lower car payment that fits your budget. In this guide, we’ll provide some tips for getting a more affordable car payment.

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11 Ways to Lower Your Car Payment

Your car payment is tied to lots of different factors. But whether you’ve already purchased a car, or you’re still shopping for a vehicle, there are ways to save money. Here are some things to consider when looking for a lower car payment:

1. Pick a Vehicle You Can Afford

One of the easiest ways to secure a low monthly car payment is to choose a car you can afford. Avoid looking at cars with high price tags that are way above your budget.

If you aren’t sure how much car you can afford, consider using an online calculator, which will help narrow your car shopping budget. Visit a few dealerships to see what options are available, and spend some time researching car prices to find a good deal.

2. Choose a Longer Loan Term

To keep your car payments low, choose a longer loan term. On average, a loan term can range from 24 to 60 months, but many lenders also offer 72- and 84-month plans for drivers looking for an even cheaper option.

A longer loan term allows you to pay less each month, but it also increases the amount of interest you pay. When comparing loans, ask the lender about the loan term options and the minimum payments you have to make.

3. Make a Bigger Down Payment

When you purchase a new or used vehicle, making a larger down payment can help you secure a lower monthly payment. The down payment covers a portion of the car’s purchase upfront and reduces the loan principal amount.

Decide how much you can afford to pay at the time of purchase, then use an online calculator to figure out how much your monthly payment will be. An online calculator also makes it easy to see how a higher or lower down payment will impact your monthly loan payment.

4. Improve Your Credit Score

Your credit score helps lenders determine if you’re a responsible borrower. If you have good credit, you can qualify for a loan with a lower interest rate, which will lower your monthly payment.

If you have poor credit, you will likely pay a higher interest rate and have a more expensive monthly payment. If you can, try to improve your credit score before you start applying for loans. That can help you secure the best interest rate possible for your situation.

5. Buy a Used Vehicle

Because used vehicles are typically cheaper than brand-new cars, opting for a used car can be a great way to keep your monthly payments low. Spend some time shopping around for a used car that has the features you want, at a price you can afford. You might also find that loan interest rates are lower for used cars than for new cars.

6. Lease a Car

Instead of buying a new or used car, think about leasing a car. Leases usually have lower monthly payments, and you get to drive off the lot in a brand-new (or nearly brand-new) vehicle.

However, leases do have downsides to consider. After the lease period, you have to return the car to the dealer, and there are restrictions around mileage and excessive wear and tear. You may also have to have excellent credit to qualify for a lease.

7. Trade In Your Old Car

During the car-buying process, think about trading in your old car, which can reduce your total out-of-pocket cost and your monthly payments.

When you purchase your new vehicle, you can sell your used car to the dealership, and apply the value to your down payment. As a result, you can borrow less money to finance the rest of the purchase and get a lower monthly loan payment.

8. Talk to Your Lender

If you currently have an auto loan and you’re struggling to afford the payments, talk to your lender. They can often help you find a temporary solution, like deferring the payments for a month or two.

While lenders are often willing to be flexible, it’s important to communicate your situation before you miss a payment. If you fail to make multiple car payments, your vehicle could get repossessed.

9. Consider Refinancing Your Loan

If you need a long-term solution to lower your car payments, consider refinancing your loan. The process of refinancing involves taking out a new loan with more favorable terms, like a lower interest rate or a longer loan term. Both options can lower your monthly payment.

10. Sell Your Car and Buy a Cheaper One

If you’re paying for a car you can’t afford, it might be a good idea to sell your current vehicle and get a cheaper one.

You can sell your car to a dealer, but you may get more money if you’re willing to sell it to a private party. Once you sell your vehicle, you can take your profits, pay off the existing loan, and find a more affordable vehicle with a lower monthly cost.

11. Make Extra Payments

When you can afford it, making an extra payment on your vehicle can reduce the amount you owe and lower your future car payments. By paying more than the minimum, you can apply your extra payment to future bills and even skip certain months if necessary.

Making extra payments can also help you pay off the car more quickly if you’re able to make extra payments consistently.

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