Household spending has risen by 25% in the past 20 years, yet incomes have not generally followed suit. This means families are stretching to make ends meet, which is all the more reason to keep the cost of running a car as low as possible.
If you’ve purchased your car through a finance scheme or higher purchase, there are things you can do to reduce costs. You can try to refinance the loan to lower the interest rate, or to extend the loan term. First, you must determine if you have a healthy credit score and work out the balance of your loan. The amount you are refinancing must be lower than the current market value of the car.
Remember that, until you have paid the loan off in full, the car is not your property. Speak to several lenders and try to get a lower interest rate than your current one, to reduce your monthly payments. You could approach your current lender and chat about your difficulties, as they may be willing to offer help. You could also try and lengthen the term of your loan, which will also reduce your repayments.
Consider consolidating your car loan with any other debts. Your monthly repayments on a single loan may be lower after consolidation of multiple debts.
Also consider selling your car and buying a less expensive vehicle. You must remember if you have a finance agreement, it must be paid off before purchasing another vehicle. You must always notify your lender of any changes you are making, either by letter or email.
Instead of buying another car, consider leasing one. As explained by Total Motion, specialists in car leasing in Leicester (http://leasing.totalmotion.co.uk/), leasing effectively means that you pay to rent a car, so you never own it. When the lease terms expire, the car goes back to the lease company.
If your savings interest is lower than the interest on your car finance loan, it would be sensible to use your savings to pay off all or part of your loan. If you cannot pay the full amount, contact your lender to discuss restructuring the loan. Even if you cannot negotiate a better interest rate, your monthly repayments will be less.