How to Make a Car Payment Manageable

I talk a lot about finances and savings with friends and coworkers. One topic that frequents the discussion is cars. While some of us have reasonable payments, others have payments that are too high. I always laugh that I would fall out if I had a payment above $300 with insurance. Some people are pushing $700 and above for their vehicles. While this may seem small to some, people with a bad financial situation may wonder how to make a car payment manageable. I have some tips that can help.

Car Purchasing Mistakes

When purchasing a car, there are some mistakes you need to avoid. Avoidance means the best rates and payments and easy to understand terms and conditions. One of the biggest mistakes people make is purchasing a new model vehicle in the same year it was produced. Even the wealthy pick up a model three years or older to help curb the depreciation.

Aside from purchasing new, many people avoid looking at the details. I can’t tell you how many times I have asked someone their interest rate, and they said they had no idea. Imagine paying $600 a month on your car payment, only to find out at the end of the year only $100o went towards the principal. Go over the details and the terms. If you don’t understand, ask them to be clear. If your finances are stressed, or it’s causing you discomfort, don’t do it.


If you have already made your oops purchase, there are several steps you can take. If you have a high-interest rate, refinance. There is no reason you should have an 18% or more rate when rates are at a historic low right now. Be sure you have worked on your credit and have a decent score before attempting this and shop around. This one step could save you hundreds a year in car payments and push more of your money towards paying off the vehicle.


If your car is causing you a great deal of financial stress and you can not refinance, trade it in. I get you may be upside down on your loan, but it’s not the end of the road. Find a used vehicle that suits your need. You only have to drive it for a brief period until your finances are in order. I’m not saying go and purchase a raggedy car, but something sturdy, reliable, and with low monthly payments.

A refinance or trade-in is the solution to how to make a car payment manageable. There are other options out there you could try like selling the vehicle privately or a voluntary repo, but those come with not so good trade-offs. If you have other tips to manage your car payments, be sure to comment below.

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