That’s the average price of a new car right now, according to Kelley’s Blue Book. This is the second highest price on record – matched only by the December 2021 average.
Car payments are following the same trend, with the average monthly payment hitting an all-time high of $730, according to Cox Automotive and Moody Analytics.
With the shortage of computer chips continuing to affect production, car prices don’t seem to be starting to come down any time soon.
For most vehicle owners, that means making the most of what they already have. One way to do this is to reduce your current car payment until the market for vehicles is a little more budget friendly.
7 ways to lower your car payment
This is probably the most obvious option, but it makes sense if you’re looking to lower your car payment in the longer term.
It may be worth checking your refinancing options. Keep in mind, however, that a longer term means more interest paid over the life of the auto loan.
2. Renegotiate your car loan
Your lender may allow you to defer a payment or two if you have to go through a short-term hardship. However, if you need long-term help, you can talk to your lender about auto loan restructuring.
They might allow you to extend the term or lower your interest rate, which makes more sense if you have good credit.
Remember: the longer term means you’ll pay more interest in the long run.
3. Sell the car
You might consider taking advantage of this hot vehicle market to sell your car and look for a cheaper option to get around. Or maybe you could manage as cleaning a car now that remote work is more common.
By taking a less expensive car, you can reduce your car payment — or not pay — and use those savings for other priorities, like saving for a new car in the future.
4. Car exchange
Dealerships need inventory right now and are more likely to pay a premium for your used car. Accept it and let them make an offer, keeping in mind that you might want something with a more affordable monthly car payment in return.
Before you go, make sure you know how much you owe – you want to get at least that much on the trade-in – and how much the car is worth. You can get a good trade-in estimate via Kelley’s Blue Book.
5. Make additional payments
Paying an extra monthly payment for your car when you can helps you pay off the loan faster and pay less interest. But it also lowers your monthly payment in the long run and may even allow you to skip some payments altogether.
One way to do this could be to claim an annual tax refund and make a lump sum payment for the car loan.
6. Make a bigger down payment
If you already have a car payment, this obviously won’t help you. But it is something to consider for future purchases.
Just like a mortgage, the more money you put up front, the lower your payments will be over the life of your car loan.
For example, if you put a $5,000 down payment on a $25,000 car with 7% sales tax and 4.5% APR, you would end up with a monthly payment of $405 on a $25,000 loan. $20,000.
Without down payment and under the same conditions, you would have a monthly payment of $499.
7. Rent your car
Yes you can rent your car. This makes sense, especially if you live in a large metropolitan area with out-of-town visitors. Maybe settle in for the weekend and let one of those tourists rent your vehicle – save some money by staying inside and let your ride earn a living for a few days. You could even offer your rental car when traveling instead of paying for airport parking.
On the carsharing site tutorial, a 2020 Nissan Altima costs $60 per day, while a 2016 BMW 4 Series costs $95 per day. The site offers everything from the basic Toyota sedan to an open-air Subaru or Jeep, to an extravagant Porsche or Lamborghini.
Robert Bruce is a lead writer for The Penny Hoarder.