Unless you’ve paid for your car outright, you probably have an auto loan. The average monthly payment for a new car is $738, while the average used car payment is $532, according to Experian.
Even if your monthly payment is lower, you could still be experiencing a strain on your finances. If that’s the case, it’s probably time to get a cheaper vehicle — provided the switch makes sense with your overall situation.
“There are a couple of ways you could have a car that’s too expensive for you. The first and probably most obvious is if you have a big car payment to meet while struggling to pay your bills,” said Todd Stearn, founder and CEO of The Money Manual.
If trading in your current vehicle won’t save you money, then refinancing your current auto loan might.
“If your credit score has improved since you purchased the car, you may be able to refinance at a lower interest rate and drop your payment that way,” said Stearn.
This will let you keep your current car while cutting down on your overall expenses.