Car loans are often one of the largest expenses we have each month, and sometimes they can become more than we can manage—especially if your financial situation changes from when you originally bought your car. But don’t worry, you may not be nearly as stuck as you think when it comes to your monthly payment or even your loan terms.

If you’re looking for ways to save money on your total car loan costs,

Jerry

, the

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built to save drivers money on

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and other car-related expenses, has all the tips you need. Just keep reading!

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3 ways to reduce the cost of your car loan

The ability to finance a car rather than paying the full amount upfront is what allows most of us to step foot in a car in the first place—most of us can't

pay cash for a car

. But just because you’re taking out a loan or a lease doesn’t mean you have to lose a ton of money on interest and fees.

Here are a few ways to ensure you’re not paying too much for your car loan.

Don’t pay so much for interest

Let’s start with the simplest way to ensure your car loan doesn’t cost you more than necessary: don’t pay so much in interest. While some lenders apply extra payments only to interest, many allow you to dictate where the extra money goes—like to your loan’s principal balance. This will not only lower the total costs of your loan, but also shorten your repayment time.

If you’ve got a little extra money, putting it toward your car loan’s principal balance can help save you money in the long run. It can also give you some much-needed financial wiggle room when you need it.

MORE:

How to calculate total interest paid on a car loan

Sell or trade in your car

There’s no rule that says you’re stuck with your car until you pay it off. A simple option to reduce your loan amount and loan costs may be to sell your car or trade it in for a more affordable vehicle.

You may be able to get more money by

selling your car on your own

, but selling a car with a lien on it can be a bit complicated. Trading it in on a new model is a simpler method of getting the cash you need to make your new loan balance more manageable.

Key Takeaway If you currently owe more than your car is worth, this won’t be your best option for saving money on the cost of your loan.

MORE: How to sell a car online

Refinance your car loan

Another option that could reduce the overall cost of your car loan is refinancing. This can be especially helpful in two situations:

Your credit score has improved since you bought your car

You have a sizable lump sum to use as a downpayment on a new loan

Both of these situations could allow you to negotiate a

good interest rate

with better repayment options, which will translate to a lower monthly payment and lower overall loan costs.

When you refinance a car loan, remember that dealer financing is only one of your loan options—and it’s probably going to be the most expensive. Private lenders, small banks, and

credit unions

often offer some of the lowest rates on vehicle loans you can find. Check with the bank where you have your primary bank account and or credit cards to see what kinds of deals they may offer to customers who add a car loan to their current banking relationship.

There can be

pros and cons to car loan refinancing

along, with a lot of small print. If you choose to refinance your car loan, be sure to aim for a repayment plan that accomplishes the goal you’re interested in. A lower monthly payment does not automatically translate into lower overall loan costs—in fact, a low payment can increase the total amount of your loan if you get it by extending your repayment term.

MORE: How to refinance a car

Make your payments on time

Avoid missing due dates to ensure you don’t pay extra money on late fees. Most loan servicers include a grace period of two to five days between the due date and when a late fee is assessed, but ensure your payments are always made ahead of this.

Get the lowest-cost loan up front

One of the best ways to ensure you’re not paying too much for your car loan is to ensure you negotiate competitive terms upfront. Here are some tips to ensure you wind up with the most affordable loan terms:

Make a large down payment—The less you finance, the lower the overall cost of your loan. Plus, a

good down payment

often results in a lower interest rate.

Improve your credit score—A higher credit score increases your eligibility for lower interest rates.

Get a cosigner—Especially if your credit score isn’t that great,

a well-qualified cosigner

can help you qualify for a lower interest rate.

Shop around—Don’t limit yourself to dealer financing. You’ll have a much better chance of finding the interest rate and monthly payment you want. A

car loan from a credit union

or small bank may be your best bet.

Keep your loan term as short as possible—Lengthening your loan term will lower your monthly payment, but it will also cost you thousands more over the life of the loan.

Pay sales tax upfront—Similar to a down payment, paying sales tax upfront lowers the overall amount you finance, thereby decreasing the overall cost of your loan.

Enroll in autopay—Some lenders offer a slight interest rate discount to borrowers who sign up for automatic payments.

MORE:

How to get out of an upside-down car loan

How to save money on car insurance

Most of the methods for reducing the total cost of your loan are pretty simple, but some require a bit of work on your part. If you’re looking for even more ways to

save money on car expenses

, find the best deal on your

car insurance

policy by shopping with

Jerry

All you need to do is download the app, answer a few questions, and you’ll be looking at customized coverage options based on quotes from top insurance providers. And shopping for insurance with Jerry isn’t just fast—it’s free and easy, and you could be looking at potential savings of over $800 a year on your insurance premiums.

“When we added a new car to our family, we were shocked at how high our current insurer was going to hike our rates. We used
Jerry
for some comparison shopping and are now saving around $1000 a year. Thank you, Jerry!” —Darius P.

Find out if you can reduce your monthly car payments in minutes

* checking your rate won’t affect your credit score

Check your rate

* checking your rate won’t affect your credit score

FAQs

Can I lower my car payments without refinancing?

Yes, you can apply for a loan modification, which usually requires proving financial hardship. Keep in mind that while this may result in lower payments through a negotiated payment plan, it will likely increase the overall cost of the loan.

How can I pay off my car loan early?

The easiest way to pay off your car loan early is to increase your monthly payment above the minimum or make extra payments.

Reduce your monthly car payments in minutes?

Find out if Jerry can reduce your payments by an average of $150/month

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