That’s the average price for a new car right now, according to the data Kelly’s Blue Book. This is the second highest price on record, matching only the average price in December 2021.
Car payments follow the same trend, with an all-time average monthly payment of $730. Cox Automotive and Moody Analytics.
As computer chip shortages continue to affect production, car prices won’t begin to drop anytime soon.
For most car owners, this means making the most of what they already have. One way to do this is to lower your current car payment until the car market picks up a bit budget friendly
7 ways to lower your car payment
This may be the most obvious option, but it makes sense if you want to lower your car payment over the longer term.
Checking your refinancing options can be helpful. Keep in mind, however, that a longer term means more interest paid over the life of the car loan.
2. Review your car loan
Your lender may allow you to defer a payment or two if you need to survive a short-term hardship. However, if you need help in the long term, you can talk to your lender about auto loan restructuring.
They may let you extend your term or lower your interest rate, which makes more sense if you have good credit.
Remember: Extending the term means you’ll pay more interest in the long run.
3. Sell a car
By buying a cheaper car, you can lower your car payment — or eliminate the payment — and use those savings for other priorities, such as saving for a new car in the future.
4. Car trade
Dealers need inventory right now and will likely pay a premium for your used car. Accept that and let them make an offer, keeping in mind that you may want something with a more affordable monthly car payment.
Before you go, make sure you know how much you owe – you want to get at least that much in trade-in – and how much the car is worth. You can get a good exchange rate through Kelly’s Blue Book.
5. Make additional payments
Making an extra monthly payment on your car, if you can, will help you pay off your 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 through an annual tax refund and a one-off car loan payment.
6. Make a bigger down payment
If you already have a car payment, this obviously won’t help. But this should be taken into account in future purchases.
As with a mortgage, the more money you put down at the beginning, the lower your payments will be over the life of the car loan.
For example, if you put down a $5,000 down payment on a $25,000 car with a 7% sales tax and an APR of 4.5%, that would result in a monthly car payment of $405 on a $20,000 loan.
With no down payment and the same terms, you’ll get $499 a month.
7. Rent out your car
Yes, you can rent out your car. This makes sense, especially if you live in a larger metropolitan area with visitors from out of town. Maybe settle in for the weekend and let one of these backpackers rent your car — save a little money by staying home and let your trip pay off for a few days. You can even offer your own car for rent when you travel instead of paying for airport parking.
On the carsharing website Turo, a 2020 Nissan Altima is $60 per day, and a 2016 BMW 4-Series is $95 per day. The site offers everything from a simple Toyota sedan to a Subaru or Jeep for outdoor recreation, all the way to extravagant Porsches or Lamborghinis.
Robert Bruce is the senior author of The Penny Hoarder.