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Is It Possible to Lower My Car Payment?

Car loans have become standard for most Americans. In fact, car loans now last an average of more than six years, according to the credit-rating company Experian. This means the public will most likely make high car payments every month for a good portion of a decade.

For new car buyers, these monthly payments average $503, which is the first time the national average topped $500 according to a CNBC article. Although interest rates remain low, these payments can be daunting. On top of that, the costs associated with owning a car can make them an expensive asset to maintain.

So are there ways to lower your monthly car payment? And under which circumstances would this be possible?

Here are four overarching ways to lower your monthly car payment: refinance, negotiate, consolidate and sell or trade.


"If your vehicle isn't too old, and you don't owe more than it's worth, you may be able to refinance," said Gerri Detweiler, Director of Credit Education at "This is easiest to do if you got into a higher-rate loan a year or two ago and now have improved your credit scores. You can shop for an auto loan refinance online or through a local credit union."

A way around the potential score decrease from multiple inquires associated with attempts to refinance is to shop for favorable terms within a two-week period. Because credit bureaus allow a shopping window for auto and mortgage financing, these inquiries would only count as a single inquiry on your credit if they are done within a short period of time.

Remember that a bank won't refinance a loan that is larger than the car's retail value because that car's owner is more likely to stop making their payments.


Negotiation isn't easy, but it might work if you feel as though you have no good options. This could alter the time or amount of the loan.

"This isn't easy to do, but if your financial situation has changed and you need lower payments, you may be able to negotiate with your auto lender to stretch out the loan or allow you to make lower payments for a period of time," Detweiler said. "The remaining amount will be added to the loan balance."


Although consolidation is not the right choice for everyone, you can consolidate your car loan with other loans in order to lower your monthly payment.

While consolidation loans often have higher interest rates than auto loans, no down payment is required, and consolidating the auto loan at a higher rate will offset when other debts are refinanced at a lower rate than you currently pay.

But be sure to confirm that consolidation would work in your individual case. If so, that one single payment might be able to help you pay off your loans more quickly.

Sell or Trade

If you run out of options, selling or trading your car might be the way to go. According to this article, you should be able to trade your car in for another one if you have good credit history from your current vehicle. This would allow you to make lower car payments and possibly have a shorter loan lifespan.

"Sell or trade in your car for a less expensive one, and roll the balance into the new loan," Detweiler said. "This is tricky though because you could end up even deeper in debt with the new vehicle. So be careful."

When considering every possibility of lowering your car payment, caution is key. If you cover all your bases, you should be able to lower your car payment in a manner that works for you.

Improve Your Credit

Being proactive in reducing your monthly payment obligations is a financially savvy move. Take action by improving your credit for a healthier financial life: Try these 6 Moves to Build Credit. For veterans, service members, and their families, it's possible to reduce your monthly mortgage payment with VA Loan Refinance options backed by the Department of Veterans Affairs.

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Veterans United is recognized as the leading VA lender in the nation, unmatched in our specialization and expertise in VA loans. Our strict adherence to accuracy and the highest editorial standards guarantees our information is based on thoroughly vetted, unbiased research. Committed to excellence, we offer guidance to our nation's Veterans, ensuring their homebuying experience is informed, seamless and secured with integrity.

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