Are Car Payments Taking Over your Life?

March 25, 2010

Most people these days have at least one car to get around. When you are looking for ways to lower your household costs, people often forget that the car payment is also subject to change. Instead, we bear with it and try to make ends meet.

On the other hand, you may have gotten a not so good deal in the first place. Your car payment may be almost as high as your mortgage. And, that’s for one car. Before you are reduced to tears, here is some advice to help you get through the crunch.

  • Consider refinancing. Many simply use the dealer’s financing company for their car loan. Doing this is expensive for two reasons: added fees and high interest rates. Sure, they can stretch your payment out for six or seven years, but you will end up paying much more than the car is worth. Remember, cars depreciate as soon as you drive off of the lot.
  • Credit unions are one of the best places to refinance your vehicle. You can get a lower interest rate and better terms. Even if you start with the finance company, there is no time like the present to stretch out those payments at a lower monthly charge than you previously had.
  • Another option is to trade in your car. Who says that you have to keep the same car until it is paid off? The car dealer will inspect your car to see how much it is still worth. If you are the kind of person who keeps your car serviced on time and keeps it clean, you have an advantage. The difference can be added to your new total for a less expensive but reliable car. Dealers are always running specials and you can cash in with a trade-in.
  • Choose a car that gets good gas mileage in the city and on the highway. Look to see what gas octane it requires. Luxury cars use higher octane, which will cost you more per fill up.
  • Finally, why not carpool with others at your job? This saves money on gas and wear and tear on your car. If there are enough people and you have a big enough car, you may drive your car to work one week every two months or so. What you save in gasoline and car repairs can offset the monthly payment.
  • Is your car threatening to be your new residence? Learn ways that you can lower that payment and still get around with cost-effective transportation.

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