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Owe money on your car? Read on for some ways to manage your loan payments.
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Owning a car is hardly an inexpensive prospect. You have to insure it, maintain it, and pay off the loan you take out to buy it in the first place.
During the second quarter of 2023, the average monthly car payment rose to $733, according to Edmunds. But if you’re buying a used car, you might be able to get away with a monthly auto loan payment as low as $250.
But while $250 is a lot less than $733, it’s still a significant amount of money in its own right. And if it’s the first car payment you’re dealing with in a long time (or ever), it might wreak havoc on your finances if you’re not careful. Here are a few tips for managing a $250 monthly car payment.
1. Stick to a strict budget
Any time you take on a new expense, it’s important to be mindful of your spending so you don’t end up falling behind on any bills. If you’re now on the hook for a $250 monthly car loan payment, do yourself a favor and set up a budget that maps out your monthly expenses.
You may need to cut back in other areas to swing that $250 a month, and putting a budget in place will help you identify the expenses you can slash most easily. Following that budget could also spell the difference between keeping up with your auto loan payments or getting behind and putting yourself at risk of losing your vehicle.
Now, if the idea of sticking to a budget makes you want to groan, you may want to play around with some different apps that make the process seamless. Many will sync up to your bank and credit card accounts so your spending is categorized for you. It’s an easy way to stay on track at a time when you might need to be more careful.
Otherwise, make the process as simple as possible. List your expenses in a spreadsheet and record your spending in each category as you make purchases during the month. If you don’t go over the amount you have allocated to each category, you’re in good shape. So for example, if you’re limiting yourself to $200 a month on leisure expenses to keep up with your auto loan payments and you find that you’re at $190 toward the end of the month, you’ll know to be very careful with your spending those last few days.
2. Get a side job
If your regular paycheck really can’t handle an extra $250 a month in expenses, you may need to resign yourself to a side job to come up with the cash. The good news, though, is that if you have a vehicle, you may be able to use it to earn money.
Many people have success driving for ride-hailing services. In addition to the money you earn by shuttling people around town, all it takes is a string of generous tippers to boost your income nicely.
3. Consolidate your debt if you’re juggling too many loan payments
It may be that your new $250 a month auto loan is just one of several debts you have. If you’re worried about keeping track of those various payments, you may want to consider consolidating your debt via a personal loan.
Personal loans are unsecured and allow you to borrow money for any purpose. And if you have great credit, you might qualify for one with ease — and at a favorable rate.
That said, it’s best to compare interest rates when you’re talking about rolling an auto loan into a personal loan. Specifically, you’ll want to make sure the rate on your personal loan is more favorable than your auto loan rate — which may not be the case.
Given what the typical driver is spending to own a vehicle today, a $250 monthly car payment really isn’t so bad. But if it’s a new payment for you, then it’s important to take these steps to help ensure you’re able to keep up.
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