If you're purchasing a new or used car, you'll probably want to know how to keep your car loan payments to a minimum. After all, the lower your monthly payments are, the more car you will be able to afford.
The first thing to look at when keeping your car payments to a minimum is the amount of deposit you'll be giving when you purchase the car. The higher your deposit amount, the lower your monthly payment will be. If possible, give at least twenty percent of the purchase price of the car when making your deposit. This will help to greatly reduce the cost of your monthly payments.
Also take advantage of dealer and manufacturer rebates. If you're offered a $2,000 rebate for purchasing a car, put that rebate towards the principal of the car to reduce the amount of the payments you'll be making. Every penny that goes towards the deposit of the car helps to reduce your monthly payments.
When trying to keep your monthly payments to a minimum, you also need to take a look at what kind of car to buy. While the cute red sports car may be calling your name, you might want to stick with a less-expensive car. The cost of the car obviously affects the car payments, and unless you have a big chunk of cash for your deposit try spending as little as possible while still buying a quality car.
Once you've chosen the car you want and you know how much money you have for your deposit, it's time to shop around for a car loan. Not all loan companies are created equal and some loan companies charge much higher interest rates than others. Because interest plays a vital role in how much your car payments will be, it's important that you get the best rate possible. Your broker should be able to help you find the rate that's best for you.
If you have bad credit, your car payment is going to go up because your interest rate is going to rise. Higher interest rates can really take a chunk of money out of your pocket. If you do have bad credit, you may want to look into having someone with good credit as a joint signatory on your loan.
If you follow all of the above advice and your car payments still seem out of reach, consider extending the loan for a longer period of time. For example, instead of paying out the payments over 24 months, pay them out over 36 or 48 months. While you'll wind up paying more for the car in the long run due to the interest, you'll be able to free up some cash and will be able to afford the monthly payments as they come.