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"How can I get the lowest monthly payment on my vehicle?"

"How can I get the lowest monthly payment on my vehicle?"

This year, the most popular question that our Sales and Finance staff were asked at Wheaton Honda is "How can I get the lowest monthly payment on my vehicle?" Ryan Hunt, one of our Finance Managers, was happy to help de-mystify the best ways to break down your car payments.


Here are the top 5 ways to lower your monthly payments:


1. Negotiate the best price possible.

moneydanceWhether you're buying privately or from a dealership, there is usually a little wiggle room on the price of most vehicles. This can be a little trickier with used vehicles, as there are costs that we have to factor in if the vehicle needed a little extra TLC.


2. Stretch your term.


When you choose a longer finance term, the amount you have to pay is stretched over a greater period of time, thereby reducing the amount you have to pay each month. If there is a lower fixed interest rate that applies to multiple finance terms, this is usually your best option to lower your payments.


3. Switch to bi-weekly payments.


"By making a payment every two weeks instead of once a month, the bank gets their money faster and you pay less per-payment than if you make a monthly payment. Depending on the way you get paid from work, this option may be superior to making a larger payment once per month."


4. Figure out how much you are financing.


Banks and lenders offer different rates based on the amount that is being financed. Their rates are typically better for vehicles that are at least $10,000, but as the price is lowered, the interest rates increase and in some cases, may have no options at all. The easiest way to get around this may be to add an extended warranty or other options to your vehicle to increase the value and help bring down your interest rate while adding protection for the length of your financing term.

You will generally find better financing rates when you are spending more, but your rate is also based on your credit and what you can qualify for.


5. If you want a better rate, use a better lender.


"Car loans in Canada are open loans, meaning you can pay them off at any time without penalty. However, with most lenders, when you decide to make extra payments or put down a lump sum it would not reduce the dollar value of your monthly payments.

If you took out a car loan with a 72-month term, and after four months you decided to put down $2000 dollars, your 68 remaining payments could drop to 63. But you would not get any instant gratification for putting money down on your loan as you still pay the same dollar amount per month.

Certain lenders like the general Bank of Canada and Bank of Montreal treat this situation differently. When you make additional payments or put down a lump sum with these lenders, they can recalculate your monthly or bi-weekly payment so you will be paying less per month for the remainder of your loan.

For example, say you have a monthly payment of $500 and you decide to put down a lump-sum payment. Your monthly payment could drop $500 to $440 for the remainder of your loan, over the same number of months.

This can be helpful when you're shopping for a car with strict number in mind, but can't seem to negotiate to the monthly payment you want. Use this tip to bring the payment into line with your budget, or to make a monthly payment that you're already comfortable with a little more cozy every month."


Want to find out the answer to more questions about financing? Check out our Wheaton Honda Finance FAQ!


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