How To Get Lower Your Car Payments: 6 Ways

February 24, 2024. By Caitlyn Moorhead

Photo of young male consultant and buyer signing contract for new car in auto show.

dima_sidelnikov / Getty Images/iStockphoto

If you want a new set of wheels but don’t have enough cash to buy a vehicle outright, you need to finance your purchase. Finding the right financing is a critical part of the shopping process, especially when factoring in higher interest rates and how to budget for your average monthly payments. When it comes time to trade in your car or lease a car you want to try to decrease any potential for future financial hardship. 

6 Ways To Reduce Your Monthly Payments

When financing a car or refinancing your car loan, you pay the seller a larger down payment and take out a loan for the balance. The monthly cost when you finance or refinance your auto loan will be a fixed amount for several years, depending on the length of the term and the interest over the life of the loan. 

You can use an auto loan calculator to determine the amount of your monthly payment based on the loan amount, interest rate and term. Then, look at these six helpful tips to minimize your car loan payments:

1. Check and Improve Your Credit Score

Check your credit report at and get your FICO score before you apply for financing. Your options for auto loans depend heavily on your creditworthiness: The better your credit, the more likely you will find loans with favorable terms.

If your credit score is not up to par, consider taking some time to improve your credit before you buy a car.

2. Shop Around for a Loan

You can apply for a loan online or at your bank or credit union. Make sure when you talk to your lender they clearly disclose the loan amount, interest rate, length of the term and total cost. This would also be true for extending your loan term for a period of time and factoring in trading in your current vehicle. 

You might also get auto financing at the dealership when you buy a car, but chances are it will be more expensive. Car buyers who finance their loans at dealers pay more than $25.8 billion in additional hidden interest over the term of their loans, according to the Center for Responsible Lending.

3. Find the Lowest Interest Rate

When you evaluate loan offers, it is tempting to focus on the monthly payment amount. Instead, look for the lowest interest rate.

A lender might try to push you into signing an auto loan with a long term that looks like a better deal because the monthly payments are low. However, it is easy to manipulate the monthly numbers and make them look good when in reality, you are likely paying more in the long run.

4.  Get Preapproved Before You Shop

The Consumer Financial Protection Bureau suggests getting at least one preapproved loan offer before you walk into the dealer’s salesroom. That way, you will be more likely to stay within your budget while shopping because you will know exactly how much of an auto loan you can count on to finance the purchase. Having this knowledge reduces your risk of being seduced by a slick dealer who tries to get you to spend more on a car.

Remember, even if you already have one loan in hand, that does not preclude the possibility that the dealer might negotiate a better financing option. Ultimately, you choose which loan offer to accept.

5. Automate Your Car Payments

When shopping for an auto loan, ask the prospective lender if it offers a discount on your auto loan interest rate if you set up automatic payments for your monthly car loan payments.

Another bonus of automatic bill payment is that — provided you have the funds in your account — you can rest assured that your payment will be made on time.

6. Refinance Your Car Loan

If your car payments take too big a chunk out of your budget, try to refinance your loan with your current lender or with a new lender. For example, you can save money if a lender offers a lower interest rate on a more comfortable loan term such as 60 months as opposed to 24 months.

Your chances for approval and good loan terms are better if you have improved your credit significantly since you applied for the original car loan.

Final Take To GO 

Sticking to your monthly budget is an important part of staying on top of your financial goals. As car payments are necessary for most people’s way of life, finding the lowest possible monthly payment goes a long way in preventing you from living paycheck to paycheck. There are straightforward steps you can take to help lower what you pay on your car loan to give you more wiggle room in your wallet.


Here are some answers to frequently asked questions about lowering your monthly car payments.

  • Is there a way to lower my monthly car payment?
    • Yes, here are six ways you can potentially lower your monthly car payment:
      • Check and improve your credit score
      • Shop around for a loan
      • Find the lower interest rate
      • Get preapproved before you shop
      • Automate your car payments
      • Refinance your car loan
  • Can I negotiate a lower car payment?
    • Before agreeing to buy or refinance a loan, make sure you shop around and find the lowest interest rate possible. When you talk to your lender, make sure they disclose the loan amount, interest rate, length of the term and total cost. If you do so with each lender you’re considering, you’ll be able to negotiate the best terms possible for your finances.
  • Can I lower my car payment without refinancing?
    • Yes, you can lower your car payment without refinancing by trying some of these options:
      • Check and improve your credit score
      • Shop around for a loan
      • Find the lower interest rate
      • Get pre-approved before you shop
      • Automate your car payments