Cars are an essential part of life for many people, but if you’re financing a vehicle, you might wish you knew how to save money on your car loan. Fortunately, there are a few steps you may be able to take to reduce the interest you pay, shorten your loan term, or make your payments more manageable.
How to Save Money on Your Car Loan: 8 Strategies
Wondering what strategies could help you save on a car loan? This list will help you get started.
1. Refinance for a Lower Interest Rate
Car loan interest rates can vary widely, and your credit score is one factor that can affect the rate you receive. According to Experian data from the first quarter of 2026, these are the average car loan rates by credit score:
- 781+: 4.55% new, 6.30% used
- 661–780: 6.23% new, 8.77% used
- 601–660: 9.67% new, 14.03% used
- 501–600: 13.44% new, 19.42% used
- 300–500: 16.01% new, 21.77% used
Is refinancing a car loan a good idea?
It might be worth considering if you can qualify for a lower interest rate than you currently have, especially if your credit has improved since you took out your existing loan. Compare the new loan’s rate, fees, term, and total cost before refinancing.
2. Switch to Biweekly Payments
What are the benefits of biweekly car loan payments? When you pay monthly, you make 12 car payments per year. With a true biweekly schedule, you make a half-payment every two weeks, which adds up to 26 half-payments—or 13 full monthly payments—per year.
If your lender accepts biweekly payments and applies them as expected, this can be one way to effectively make one extra car payment each year. Check with your lender first to understand how and when partial payments are credited.
3. Make Extra Principal Payments
“What happens if I pay an extra $100 a month on my car loan?” is a common question. Depending on your loan and how your lender applies additional payments, putting extra money toward the principal can reduce your balance faster and may lower the total interest you pay over time.
You don’t have to make large additional payments for this strategy to make a difference. Even rounding up your monthly payment may help. Check your loan documents or contact your lender to confirm how extra payments are applied.
4. Put Any Cash Windfalls Toward Your Loan
If you get a bonus at work, a tax refund, or another sizable sum, you might consider putting some of it toward your loan to reduce your balance faster.
Before you do, check your loan documents to see whether a prepayment penalty applies and confirm how an extra payment will be credited.
5. Rework Your Budget to Free Up More Funds for Your Loan
If it’s been a while since you’ve looked over your budget, now might be a good time. If you identify areas where you can comfortably cut back, you might find that you’re able to put more toward your car loan than you thought.
6. Ask About Payment Relief
If you’re paying off your car loan while struggling to make ends meet, you might wonder: Is there a way to get car payments lowered? There may be. Contact your lender to ask whether it offers hardship assistance or other payment options.
If you’re thinking about how to lower your car loan payments, consider the potential tradeoffs. For instance, lowering your payments now may provide relief, but extending your loan term could mean paying more interest over time.
7. Avoid Adding More Costs
Rolling additional costs or an unpaid balance from another vehicle into a car loan can increase the amount you have to repay. Before adding to your loan balance or extending your loan term, consider how the change could affect both your monthly payment and the total cost of the loan.
8. Keep Your Car Affordable to Own While You Pay It Off
Staying on top of regular maintenance may help you avoid larger repair bills that could put additional pressure on your budget. Auto insurance is another significant ownership expense, and shopping around and comparing coverage and quotes may help you find a policy that better fits your needs and budget.
Saving on Your Car Loan Could Help You Get Ahead
Interest can add up over the life of a car loan. Understanding your options for reducing your loan costs or paying down the balance faster may free up money for other financial goals. The right approach depends on your loan terms, budget, and what your lender allows.
FAQ
How Do I Pay Off a 6-Year Car Loan in 3 Years?
You’ll likely need to increase your monthly payments substantially. The exact amount depends on factors such as your remaining balance, interest rate, and how your lender applies extra payments. An early payoff calculator can help you estimate the payment needed to reach a three-year payoff goal.
Should You Refinance Your Car Loan?
Refinancing may be worth considering if you qualify for a meaningfully lower interest rate or better loan terms. Compare the new rate, fees, loan length, and total repayment cost before deciding.
Can I Avoid Prepayment Penalties When Paying Off My Car Loan Early?
It depends on your loan agreement and applicable law. Check your loan documents or ask your lender whether a prepayment penalty applies before making a large extra payment or paying off the loan early.
How Can I Save Money on My Car Loan?
Depending on your loan terms, refinancing at a lower rate, making biweekly payments, or making additional principal payments may help reduce your borrowing costs or shorten your repayment period. Check with your lender to understand how extra payments are handled.
