Americans are struggling to make car payments. Here’s what to do if you’re one of them
When you think of your heaviest bills, your mortgage or rent payments might come to mind. But what about your auto loan? If you own a car, you may be spending a small fortune on these monthly payments.
If you’re having trouble keeping up with your car payments, you’re in good company. In December, 8.4% of Gen Z, 13.7% of Millennials and 9.4% of Gen X were struggling to afford their car, according to recent data morning consultation. Here’s how you can minimize that burden and avoid falling behind.
1. Refinance your car loan
Just as it is possible to refinance a mortgage, you can also refinance a car loan. If your credit score has improved a lot since you took out your loan, you may qualify for a lower interest rate on your car loan, one that could lower your monthly payments and make them easier to keep up with. It pays to do some research to find the best deal.
To be clear, you don’t have to work with your current lender to refinance an auto loan. If another lender makes you a better offer, you should feel free to pursue it.
2. Rework your budget
If refinancing your car loan isn’t an option — for example, you already have a low interest rate or your credit score needs improvement — then it might be time to review your budget and make some cuts. That could mean canceling your cable plan (at least temporarily) and spending less on entertainment. Or, it could mean finding a roommate to lower your rent payments.
3. Get a second job
You may already be living a frugal lifestyle that makes you spend minimal outside of basic expenses. If so, you might want to consider getting a side hustle to make it easier to track your car payments. Not only could a second job help you cover your car loan payments, but it could also put you in a better position to handle all your bills and even pay off your savings.
If you’re not sure which hustle to get, consider your schedule. If you need flexibility, you’ll want to focus on work that you can do at your own pace. You might even consider driving for a ride-sharing service to earn some extra cash. This way your car can help pay for itself.
Car loan payments can be a big burden, even if you bought the cheapest car you can find. If you’re having trouble making your payments, see if it makes sense to refinance your loan. If not, consider changing your expenses or increasing your income to help you stay afloat.
Finally, ask yourself if you really need to hold on to your car. If you live in the suburbs, you may need a vehicle to operate. But if you live in a walkable area and no longer commute to work (many companies keep long-term workers away at this point), you might be able to sell your car and avoid those payments in the first place. .
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