After working in the automobile industry for 4 years and selling close to 500 cars in less than 3 years, one of the most frequent questions I get is "How Can I Lower My Car Payment?" Of course, your credit score will play a role as this will determine if lowering your car payment is possible at all! Here are a few ways you can go about dropping that payment.
1. Refinancing Your Auto Loan
Many banks and credit unions give consumers the opportunity to refinance their cars and potentially lower their monthly payment. Notice I said "Potentially" as some consumers just want to lower their interest rate and possibly shorten the loan term at the same time which in case keeps the payment almost the same. Why do this? It keeps most of the money from the monthly payment towards the actual principal of the loan instead of the interest. Usually, the main purpose of refinancing the auto loan is to lower the monthly payment by lower the interest rate, extending the term, or both. Most of the good re-fi rates are for the 680 and above scores only. Anything under that will probably be in double digits. Banks that do auto re-fi loans are Capital One, Wells Fargo, Fifth Third Bank, and many more. Keep in mind, your credit score will be a determining factor as that will give you the interest rate you qualify for.
2. Trade In The Current Car In For Another Car
This way is usually the easiest way to get a lower monthly car payment. Unlike a re-fi, when trading a vehicle in at a dealership opens up the doors for lower interest rates as multiple banks fight to earn you business. Everything is done electronically of course but in most cases consumers have no idea that they now qualify for a lower payment because they now have better credit than at the signing of the original loan! One thing to find out ahead of time is what new incentives the dealership will have on certain vehicles. I have seen consumers get approved for the special finance rate of 0%-2.99% with a 620 credit score! Also keep in mind that negative equity (upside down) may or may not play a factor.
3. Pay Extra Or Make A Lump Sum Payment
I saved this option for last as not many consumers are able to afford to do this in order to lower their car payment. When you make extra payments on your car loan that go toward the principal, this will lower the overall monthly payment simply because the overall amount financed is now lower. Most banks will not charge a early payoff penalty. This option is for consumers that plan on keeping the current car for at least 4 years or more. A lump sum payment would be the same outcome as there would be smaller amount owed because of the lump sum payment. This happens mostly around tax season and lowers the payments but not always by alot. Be sure to decide if this option is for you or not.
The Bottom Line
Now you have the 3 Ways To Lower Your Car Payment Right Now. Hopefully this has helped some of you for your own situation or someone that you may know. For more topics such as this one, free credit tips, and discounts, be sure to join our email blast here!
Calvin Russell Jr is a Certified FICO Professional, Approved Partner With Bankrate, and the CEO & Founder of Simply Professional Credit Consultation. SP Credit Consultation has helped hundreds of people increase their credit scores, qualify for homes, cars, and lower interest rates with their personal, Step-By- Step Action Plans. Contact us today to learn more or email us at info@gosimplypro.com.
Most consumers are not sure why their credit scores won't increase. There is nothing more frustrating than looking at your credit score every week or month only to see the same number. There are few reasons why your credit score won't increase.
1.
Problem: No Current Credit Card History
This is the #1 culprit on most the credit reports I see on the daily basis. Most consumers are afraid to get a credit card. Many consumers had said that their parents or friends told them how credit cards are bad for you. Another reason they mentioned was that they didn't want to accrue debt. All of this comes from lack of knowledge about how credit cards work for and against you. I wrote an article on this not too long ago----Read: How Credit Cards Work.
Solution: Get A New Credit Card
The easiest way to solve this is to get the right credit card for you and your credit score. Most consumers apply for the wrong credit cards and end up getting denied or having to pay a deposit. If your score is above 550, you should apply for a Fair Credit Score Credit Card. If your score is under 550, you should apply for a Secured Credit Card. Be sure to read my article above to use credit cards the right way and see a big increase in your credit score.
2.
Problem: Great Payment History Every Month, But New Collections As Well
Another problem most consumers have is doing everything right by paying bills on time and keeping low credit card balances. But their problem is simply forgetting about old unpaid accounts that have become "Collections." Collections hurt your credit score tremendously and sometimes by 40 points or more! On time payments increase your score but it can only go so high if there are collections that put a ceiling on the progress.
Solution: Pay The Collections & Ask For A Dispute Online
Many consumers think that when you pay a collection in full or a settlement, that it will be removed from your credit report or that your score will increase. That is incorrect. Once the collection is paid, you must ask them to remove it from your credit report and/or dispute it from your credit report. The FCRA does not allow accurate information to be removed but in most cases they will remove it from the credit report if they see that it is paid and viewed under investigation in less than 30 days.
3.
No Recent Activity On Accounts
Some consumers have not swiped their credit cards or opened a new account in a while. I am not saying add debt. I am saying that if you have cash, its okay to swipe your credit card and pay the bill on your phone or computer when you get home. Its simply showing creditors that you still can pay on time and that is what credit is all about.
Bottom Line
Hopefully, this has helped some of you as I see credit scores that don't increase all the time. If you practice good credit habits, you will always be a FICO High Achiever (780+). Thanks for reading and I will see you in the #850club!
Calvin Russell Jr is a Certified FICO Professional and the CEO & Founder of Simply Professional Credit Consultation. SP Credit Consultation has helped hundreds of people increase their credit scores, qualify for homes, cars, and lower interest rates with their personal, Step-By- Step Action Plans. Contact us today at www.gosimplypro.com to learn more or email us at info@gosimplypro.com.
