When you purchased your car, you did so with the idea that it would fit nicely in your budget. But over time, you’ve come to find that it’s putting a bit too much stress on your finances.
Should this happen, don’t sit back and hope that your financial situation improves. Instead, learn more about all your options, weigh the pros and cons, and decide what to do next.
Here are a few ideas to consider:
1. Sell It
If you don’t absolutely need a car, consider selling it and doing without for the time being. This will go a long way in saving you money.
Not only does it eliminate your car payment, but it also saves you on the cost of maintenance, fuel, and insurance. You may like the way it feels to live “car free.”
2. Trade It In
Even if you love your car, you may not love the payment that goes along with it. And for that reason, you should consider trading it in for something more reasonable.
Don’t do so until you have a clear idea of what you’re trying to accomplish. For instance, how much money are you attempting to shave off of your monthly payment?
Once you have a better idea of short and long-term goals, you can visit a local dealer with the idea of making a change.
3. Pay it Off
This is easier said than done, but if you have the financial resources to pay off your car loan you may want to do so.
Once this is out of your life, you now have a car that you can drive without paying the lender another dime. Sure, you’re still responsible for maintenance and insurance, but you’re saving big on the monthly payment.
4. Refinance Your Loan
Many people are familiar with the benefits of refinancing their mortgage, but they never think twice about doing the same with their motor vehicle.
Contact your bank, explain your situation, and ask them if they offer auto refinance loans. You can then answer questions such as:
- What interest rate do you qualify for?
- What term makes the most sense?
- How much money would you save each month?
- Are you okay with the idea of paying longer on your loan?
There are hundreds of lenders that can help refinance your auto loan, so don’t sell yourself short. Compare three to five lenders with the idea of choosing the one that best suits you.
It’s your hope that you can easily afford your car payment until it’s paid off. However, if your finances take a turn for the worse, that may not be possible.
If your monthly payment is too expensive, consider one or more of the options above. It may be just what you need to maintain financial stability during a rough patch.