There are, in actuality, two types of “car payments”. The first is the result of an auto loan. The second type is the result of car leasing.

Auto Loans

Auto loan payments for those without the type of funds that allow for a car purchase on a cash down basis are standard to most people. Obviously, the old adage about car dealers is still somewhat accurate. If there is anything a potential car buyer should do, it’s check, before purchasing, the manufacturer’s price to the dealer. This gives the buyer a fount of knowledge that acts as protection from bloated dealer pricing. With this kind of information going into an auto loan, the buyer can accurately configure how much the dealer is adding on to dealer price. In addition, there are several internet websites that provide information on every manufactured automobile. This is crucial if the purchased auto is to be “pre-owned” or used. Be aware that the rate of interest on auto loans are predetermined by a combination of credit rating and the dealer’s financing arrangements.

Auto Leasing

Auto leasing payments require a cash down deposit and there are several other leasing contract agreement issues. One of the most important is auto insurance on a leased vehicle. Others are length of lease, terms and conditions of lease contract and any end-of-contract issues that may arise.

Follow these 3 Steps to Get Rid of Car Payments

Owning a vehicle for most people is a necessity. Car loan and car leasing payments aren’t. Smart car buyers know that it’s a better investment to purchase a “pre-owned vehicle” 2 years old or newer. The reason is that such “preowned” vehicles most often have a lower rate of depreciation in value than a new car right off the dealer’s lot. Most preowned vehicles have a maintenance contract for repairs for up to 2 years. In some cases, this is similar to maintenance agreements on a new car. There are several steps to take to get rid of car payments:

1. Double the car payments paid each month. This decreases the number of payments.
2. Use “windfall” money, i.e., tax rebates, employee bonuses, etc. to pay off the loan
3. Sell any household or other items not in use or that have become obsolete to pay off loan payments.

Getting rid of car payments is beneficial as it reduces monthly debt and loan interest paid.