If you're looking for a few tips on managing a high car payment, you're not alone. The average monthly car payment is now a record $733, according to Edmunds. And even if your monthly auto loan payments are around $500 per month, that still may be uncomfortably high.
And that's before adding up the cost of maintenance, fuel, and auto insurance. When you add in inflation and the rising cost of auto insurance, there's no getting around the fact that owning a car is getting more expensive.
Keeping up with these expenses and a $500 automotive payment can be a lot to handle, so here are a few tips to help you manage your monthly payments.
1. Consider refinancing your auto loan
If you want to lower your monthly car payment, one good option is to refinance the loan. If your credit score is better than when you first applied for your auto loan, you may be able to get a better interest rate. Improving your interest rate could help reduce your monthly car payment.
Even if your credit score hasn't improved, you may still be able to refinance the loan at a better rate if you have equity in the vehicle. For example, let's say your original loan was for $40,000, and you have $20,000 left on the loan. If the bank values your vehicle at $30,000, you may have $10,000 in equity.
Having more equity in the vehicle may help you get a lower interest rate, but keep in mind that if you have too much equity, you may not be able to refinance the loan.
2. Map out a budget
Budgeting may be universally despised, but knowing where your money goes every month is the best way to find and cut unwanted expenses.
If you're having trouble making your monthly car payment, setting up a budget to track your expenses is a great first step toward managing your money. Luckily, it's easier than ever to track expenses using budgeting apps.
These apps can gather your credit card payments, bank statements, and other financial information to give you a complete picture of where your money is going. Once you know that, you can hone in on a few expenses to cut -- like unnecessary subscriptions or extra meals dining out -- to make it easier to cover your monthly car payment.
3. Consider consolidating your debt
If you already have the lowest automotive interest rate and have done everything you can with your monthly budget, another way to help with your car payment may be to consider consolidating your debt.
For example, if you have credit card debt in addition to your car payment, consolidating all of your loans with one personal loan could lower your monthly payments. It can also make managing your money easier by having one payment to make each month. It's important to shop around if you're considering this option to ensure you're getting a better interest rate on a personal loan than what you're currently paying.
Even if you don't end up going this route, looking at all of your current debts, their interest rates, and what options you may have to improve your monthly payment amounts can give you a better idea of how to manage your money.
Don't be discouraged
It's easy to think that you're the only one trying to figure out how to manage your money better. Believe me; we're all still learning. If you need some extra help, check out some financial literacy apps that can teach you about budgeting, investing, paying off debt, and much more.
Our picks for the best personal loans
Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.
