When you’re buying a new car, it’s easy to get so excited that you overlook the impact on your budget. However, once things settle down, you may come to realize that you made a mistake—and that’s enough to drive you insane.
The first thing you must do is decide if you want to keep your car or get rid of it. If you decide in favor of the latter, it’s time to consider your options and take immediate action.
While there’s no right or wrong way to ditch your car payment, there are a few strategies that are more effective than others. Here are three to consider:
1. Trade It In
If you’re unhappy with your current car payment, trade it in on another vehicle.
This is a simple process, for the most part, but there are some questions you need to answer:
- Are you underwater on your loan?
- What type of vehicle do you want to purchase this time around?
- What can you afford to purchase, keeping your monthly payment target in mind?
It’s okay to work closely with the dealership to find what you’re looking for, but don’t let them push you down the wrong path. You need to make the decision that’s best for you and your finances.
2. Refinance Your Loan
Many people consider this an option when it comes to their mortgage, but they never think twice about refinancing their car payment.
When you refinance your loan, you do so with the idea of lowering your payment—even if that means that your term increases.
Before you go down this path, make sure you’re familiar with the pros and cons of refinancing. And of course, consult with a minimum of three lenders to ensure that you choose the right one.
3. Sell It Yourself
You don’t have to trade your car in at a local dealer. You have the opportunity to sell it yourself, which often nets you more money in the end.
If you’re going to do this, be sure that you have a plan in place for what comes next.
Are you going to purchase another vehicle? If so, how much do you want to spend? Are you going to buy used or new?
If your car payment no longer fits into your budget, it’s time for a change.
By taking one of the steps above, you’ll find yourself in position to ditch your car payment with the idea of saving money every month.
Have you ever had to get rid of a vehicle because the payment was too high? Which steps did you take to make this happen?