How to Lower a Car Payment

This is a guide on how to lower a car payment. Lowering your car payment can be done easily by shopping around for better loan terms, or even for a different vehicle.
Written by Jacoba Bood
Reviewed by Jessica Barrett
If you need more breathing room in your monthly budget, you can get a lower monthly car payment by refinancing, lengthening your loan term, or considering a less expensive vehicle.
Car insurance
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Here’s what you need to know about lowering your monthly car payments.

How to get a low monthly car payment

Here are a few helpful ways that you can lower a car payment before you buy a vehicle.

1. Comparison shop

When it comes to finding the best financing rate on your loan, it pays to shop around.
Use online loan calculators to get a better idea of the monthly rates you can afford. Be sure to explore different options, including banks, credit unions, and online and specialized lenders. Getting pre-approved before you make an offer on your next car will give you leverage to negotiate a better rate with the dealership.
Remember, the best loan isn’t usually the one with the lowest monthly payments. Focus on landing a better interest rate and shorter loan payment term instead.

2. Save up for a down payment

Putting down 20% or more upfront can lower your monthly payments and help you walk away with a better long-term rate.
Even if you don’t have the full 20% to put down, a
good down payment
of any size can help lower your monthly payment rates. Taking a few months to save up and improve your credit score will give you more power to negotiate a loan that works with your budget.
You can use online credit score tracking tools like
Credit Karma
to stay on top of your credit while you save. Knowing your credit score will help you apply for the right kind of loan and avoid unnecessary dings on your report.

3. Lengthen your loan term

You can opt for a longer loan term in favor of more affordable monthly rates—but it will cost you more in total interest.
Lenders will often be willing to stretch out your loan term because they know they will collect more interest in the long run. Be forewarned that a longer loan term might come with increased
, too. In taking out a longer loan, you put yourself at greater risk for ending
upside down on your car loan
—owing more on your loan than your car is worth.
Generally speaking, it’s better to opt for higher monthly payments in favor of a shorter loan term. If you’re struggling to budget for your monthly payments, saving on your car insurance coverage will help. The average
user saves $879 a year when they use this simple car insurance comparison app to find the best rates on insurance coverage.

4. Consider a more affordable vehicle

Opting for a more affordable vehicle is one of the most practical ways to cut your monthly payments without having to pay more in the long term.
Keep in mind that monthly financing rates aren’t the only thing to consider when budgeting for a new car. You’ll also need to factor
car insurance
costs into the price—and some vehicles cost you more to insure than others.
Using a smart insurance shopping tool like
will help make comparison shopping a breeze.
Jerry will generate competitive quotes from top providers in less than a minute. Jerry gathers your information from your past insurer, so you're not responsible for any long forms or phone calls. Basically, you get all of the savings and coverage, with none of the hassles.
Key Takeaway
Shopping around for the best loan, saving up more for a down payment, lengthening your loan payment, or purchasing a more affordable car are all easy ways to lock in a more affordable monthly rate before you buy.

How to get a lower car payment on an existing loan

Even if you already have a loan, you might be able to lower your monthly payments to make them more affordable. Here's a few ways how.

1. Talk to your lender

If you feel like you’re at risk of slipping behind on your payments, reach out to your lender as soon as possible.
Sometimes a lender will be willing to renegotiate the terms of your loan or accommodate your budget to help you get back on track. Remember that if you want to lower your monthly payments, you will have to increase your loan term and maybe accept a higher APR.

2. Refinance your loan

Refinancing your loan can help you get better terms that work with your budget.
Refinancing a car
is the easiest way to get a lower car payment. When you refinance a loan, you're finding a new lender who will pay off the original loan and give you a new deal.
Refinancing can work in your favor if average car loan interest rates have dropped or if you’ve improved your credit score since you took out your original loan. If not, you’ll probably have to accept less favorable loan terms and new loan fees in exchange for a lower monthly payment rate.

3. Consider a trade-in

Trading in for a more affordable vehicle can help lower your monthly payments without refinancing.
While the dealership might not give you the best price for your trade-in, you can use that value as a down payment to reduce your loan. If you choose a cheaper car to insure, you can put the savings toward your monthly payments to help you save more in the long term.
Key Takeaway
To get a better monthly rate on your current loan, consider refinancing or renegotiating your loan with your lender or trading in your car for a more affordable option
If you’d rather leave the hard work of gathering car insurance quotes to someone else, use
. This free app collects quotes from up to 45 top insurance companies in seconds!

Jerry’s car loan comparison tool

You deserve a loan package that works for your budget and the confidence that you’re getting the best deal on your auto loan refinance. Jerry can help you get both.
Comparison shopping is the most effective and efficient way to make sure you’re getting the best refinanced auto loan.
You can call around to compare loan terms—but who has the time (or patience) for that? To easily compare multiple rates from top lenders, use
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"I cannot express enough how amazing Jerry is. Everything was just so easy and smooth—the whole experience was amazing. They took care of everything, including canceling the current policy I had so I didn’t have to.Amazing." — Satisfied Jerry customer
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