How to Get Interest Reduced on a Car Payment

If you've financed through an auto dealership, you may be paying unnecessarily high interest rates.

Reducing the interest rate on an auto loan can help if you are experiencing a financial hardship. Financial analysts estimate that 70 percent of Americans make payments on auto loans with varying interest rates. Research interest rates of various financial lenders to see if you can reduce your payments. Organize your financial information to present to potential lenders.

Things You'll Need

• Documentation of financial hardship and current loan agreement
• Financial hardship letter
• Quotes from other lenders

Instructions

1. Gather your loan agreement and documentation that proves you cannot afford the interest on your loan, if applicable. This could include letters showing pay cuts or other loss of salary. Write a financial hardship letter to your lender summarizing the documentation and requesting an interest-rate reduction.

2. Go to other lenders and determine what interest rate they would be able to provide if you refinance your auto loan. A shorter loan period will result in you paying less in interest. Get their interest rates in writing.

3. Call or visit your lender and explain to a manager that you cannot afford your current interest rate. Visit a different lender if your current lender cannot match your written quotes. Give them your documentation and letter and permit them to make copies if requested.

4. Negotiate with your lender for the interest rate you want, asking for an interest rate lower than what you know you can afford in anticipation of a higher counter-offer.

5. Choose the lender who was willing to give you the lowest interest rate. Ask them for a refinance/auto loan application form and, if approved, sign the new loan agreement.

References

• Edmunds: Refinancing Your Auto Loan
• Your Auto Loan Calculator: 4 Ways To Pay Off Auto Loan Debt