Getting your budget in control after adding a high dollar auto loan is not as hard as you may think. Here are some ways to lessen the impact on your budget.
Modify Your Auto Loan
First, let’s take a look at the most obvious solution, modifying your existing auto loan.
The first way to do that is with an auto refinance. This will require some leg work from you, but it will be worth the effort, even if you can only lower your interest rate by a point or two. Check with at least three individual lenders, with an emphasis on local credit unions. Once you have some offers, compare them to your current loan and make sure that there are no hidden fees. If all else fails, proceed with the refinance. Most auto loan refinances are very easy, with the lender doing the majority of the work.
Another option is a loan modification. This may be a good choice if you do not want to leave your lender but need some relief due to financial stress. Lenders can often make modifications by stretching out the loan term or sometimes even reducing the interest rate. In any case, all it will cost you is a phone call.
Consolidate Your Debt
If you have credit card debt, you know exactly how much you are wasting each month on credit card interest. Consolidating all of that debt into one loan can drastically cut the interest and lower your total monthly payment.
Debt consolidation is a great choice because it comes with a number of hidden benefits. One of the biggest benefits is that you will only have one payment to make each month, streamlining bill day and making sure you do not miss payments. Another perk is that you will have a set date for when your debt is paid. With credit cards, you never know when you will be done, but with a fixed installment loan, your date is set in stone. Finally, your credit may improve because paying off those card accounts will lower your credit utilization.
Cut Auto Related Expenses
Take a look at your budget and look at all the little expenses that are wrapped up with your ownership of an automobile. You have gasoline, tolls, auto detailing, garaging expenses and of course, auto insurance. Your two biggest expenses will be auto insurance and gas, so let’s concentrate the most on these two.
Auto insurance is fairly easy to negotiate down, especially if you have been with the same carrier for some time. Your first step should be calling your current insurance provider and asking them to look at your policy and see if there are any savings to be had. This could be accomplished by bundling services, looking for missed discounts or raising deductibles. Do this and get the best possible rate if you stay.
Next, you will look into leaving for another provider. This will likely be the best way to realize maximum savings because many insurers offer significant discounts to attract new clients. These will probably only last you the first year, but who is to say that you can’t switch insurance every year.
Use Your Car To Make Money
Instead of cutting expenses, another alternative may be to just bring in more money. You obviously have a car, so put it to use.
The simplest way to do this is by joining a ridesharing service like Uber or Lyft. With these services, you simply log in and start working whenever you have free time. There is no more convenient way to start making extra cash on your schedule.
Delivering goods and food is another option. You can deliver groceries with a company like instacart or food with the usual suspects like UberEats and DoorDash. Just like with ridesharing, these income streams will allow you to work on your schedule.
Make Your Vehicle More Efficient
Fuel is a major expense when you own a vehicle, but it is not a fixed one. You can increase your vehicle efficiency and cut down on the amount of gasoline or diesel that you use.
The most effective way to reduce fuel usage is to change your driving behavior. Accelerate slowly and drive the speed limit and you can realize an increase in MPG of several miles a gallon. Doing things like adjusting the air conditioner to a higher setting can also have an impact.
Maintenance is another big factor in how much fuel that you use. Keep your oil changed and your air filter clean and your vehicle will run much more efficiently. Also, keep your tire pressure to specs. Too low of pressure and your vehicle tires will create drag, reducing your mileage.
Summing It All Up
There are a number of ways to make the budget work if you are saddled with a high auto payment. Just be sure to take the initiative and research all of your options. The effort will pay off many times over.