Colorado Springs Auto Loans

A resounding concern of most of our visitors is how they are going to keep the monthly payments on their Colorado Springs auto loan affordable. On this page, we'll discuss several strategies to help you contain your monthly car payment.

Lower Is Not Always Better

Before we impart payment-lowering strategies, it's important to issue a word of caution first. When it comes to Colorado auto loans, the lowest possible monthly payment does not always translate into the best overall deal. Some buyers get myopic when they loan shop and focus exclusively on monthly payments to the detriment of other features of the loan. For example, a loan with a 72-month term might have extremely low monthly payments, but it will likely be the costliest loan long term because of added interest expense. Similarly, one Colorado Springs auto loan might have an attractively low monthly payment but will bury you in charges and fees up front when you close the deal.

Spruce up Your Credit

One of the most effective ways to lower the monthly payments on Colorado auto loans is to make sure your credit is in good shape going into the borrowing process. Your credit score will determine the interest rate you receive, and this in turn affects your monthly payment. If your credit history has a few blemishes on it, fix what you can before you apply (e.g., pay old credit card or utility bills). If your credit could really use some work, consider taking a year or so to pay your bills on time, pay your balances down, and use credit responsibly to improve your score.

Tweak the Loan's Term

Colorado Springs auto loans with obscenely long terms have become the norm nowadays, but that doesn't make it a sound financial decision. Granted, extending your auto loan's term will reduce your monthly payments to maximize your cash flow, but you will pay a bundle of extra interest. If you need to choose a loan with a longer term, try to stay as close to the 36-48 month mark as possible and/or make extra payments whenever possible to pay the loan off early.

Make a Bigger Down Payment

A substantial down payment of 20% or more will help you in more ways than one. First, it will obviously lower your Colorado auto loan monthly payments because you will be borrowing a smaller amount of money. Secondly, a larger down payment might entitle you to better interest rates with some lenders. Finally, a larger down payment will prevent you from ending up with negative equity in your new vehicle, or being upside-down in the loan. This situation occurs when you owe more on your car loan than the vehicle is actually worth. A 20% down payment takes care of the typical first-year depreciation so you don't end up in that predicament. You might also be one of the big four to consider refinancing. Find out if you are before you make any financial decisions.