What are some good tips and tricks for managing a car loan?
I plan to get my first car loan soon. What are some helpful tips to manage it properly?
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Answered on Apr 02, 2021
Jim Donaher is a freelance writer and manager with over 35 years' experience in the insurance, banking, and investment management businesses. He provides expertise on a range of topics and is able to explain complex industry information in layman's terms. Jim is the author of two books, including Call Him, He's Home: A Guide to Prayer for Regular People and Then Larry Smiled, a novel about life, death, accountability, and salvation. Taormina, Sicily is his happy place!
First off, before you get a car loan, you should ensure that you understand how your loan payment will fit into your overall budget. If you don’t have a budget, now is a good time to establish one. In addition to your car loan payment, consider your rent or mortgage, your credit card bills, commuting costs, and other expenses, as well as your sources of income. Having a clear picture of your income and expenses means you’ll be able to manage your limited resources more efficiently.
Once you have ensured that your budget enables you to take on an auto loan, make sure to prioritize your monthly payment. Pay it in full and on time. A great way to make this easier is to allow the lender to withdraw your payment from your checking account. You will probably have some flexibility as to the date they pull the payment each month, so the withdrawal will coincide with your regular payday. You can also set up recurring payments through your bank so the lender gets their money on time and you don’t need to think about it.
If you have made a few payments and you are no longer comfortable with the original terms of your loan, you can try refinancing it. Many financial institutions offer refinancing on car loans with better rates and, possibly, more flexible terms. It’s worth looking into, especially if interest rates have fallen or your credit has improved.
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