Another way to cut down on your expenses is to re-negotiate your car loan with your existing dealer, if you have consistently been making your payment for the past 12 months. You have some negotiating power when it comes to refinancing your loan. Look for another vehicle with your dealer that is newer and priced well. Bring back your older car as a trade in against the newer vehicle, your dealer will be able to sell another car, and that is good enough as an incentive for them to reconsider your application with lowered interest rate. Ideally you should look for a vehicle that is not older than 5 years, and import brands will usually carry a higher resell value and better quality. So in a nut shell if your payment history is good for the past 12 months you maybe in a position to buy a newer vehicle with your selling dealer. Remember if there is an incentive for your dealer to move another car, they may just be willing to do that for you.
Contrary to popular believe a newer vehicle will typically carry a lower payment due to several reasons. For one the banks will be willing to finance a newer vehicle because that vehicle will have minimal chances of mechanical repairs therefore a better investment on their money. They can afford to offer you a lower interest rate since the vehicle will most likely last few more years, and therefore they can collect more money back in the form of the interest. An older vehicle has a much lower life span in the eyes of the lender; they will have to consolidate the loan into a 24 or 36 month terms, making your monthly payment considerably higher. The much higher interest incurs for the same reason, if the banks think the vehicle only has 2 to 3 years of investment value they will try to collect all they can on the interest before the opportunity run out. So the next time you are looking to lower your monthly payment, you should make sure you have met the minimal requirements before you take the plunge.
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