If you have an existing car loan, the quickest way to lower your car payments is to refinance the loan to a better one. On average, you can reduce your interest rate by 2.4%.
The rule of thumb commonly cited is to put down at least 20% of the purchase price on your next car. If you want to and can afford to put down more, it will help to lower your interest payments and monthly payments.
While Experian and Equifax are the most popular bureaus among auto lenders and car dealers, TransUnion can also be used for auto loan decisions. And the truth is, the credit bureau lenders use when evaluating your auto loan application probably will not influence their decision too much.
Find the right special finance lenders to fit your needs from the list below.
The lender may be willing to work with you to lower your car payment without refinancing. Keep in mind that even if you defer payments or negotiate a lower monthly payment, the loan balance will most likely stay the same and you'll still owe interest on it.
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The general rule is that for every $1,000 you put down, your monthly payment will drop by about $15 to $18. If depreciation would put you at financial risk in the event of an accident, pencil out the cost of gap or new-car replacement coverage.
The vehicle's price determines how much cash you should put down
| Vehicle Price | 15% Down | 20% Down |
|---|---|---|
| $6,000 | $900 | $1,200 |
| $8,000 | $1,200 | $1,600 |
| $10,000 | $1,500 | $2,000 |
| $12,000 | $1,800 | $2,400 |
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Your credit score and average interest rates
Equifax offers a credit score band for you to gain some insight on where you are if you're looking at an interest rate on a car loan: Excellent – 833 – 1,200. Very good – 726 – 832. Good – 622 – 725.
PenFed Credit Union is the only loan company that uses only your Equifax credit data. In most cases, you won't be able to determine beforehand which credit bureaus your lender will use. In some cases, lenders will pull your credit report from two or even all three major credit bureaus.
While the FICO® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: FICO® Score 2 (Experian) FICO® Score 5 (Equifax) FICO® Score 4 (TransUnion)
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