This Is the Average Auto Loan Payment. Here's How You Can Pay Less

Two people peek into the window of a car that's for sale.

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These tricks could save you serious money.

Key points

  • New data reveals that the average monthly car payment is $433 as per a recent survey.
  • You might get away with spending even less if you're shopping for a car.

Depending on where you live, a car may not be a luxury, but rather a necessity. It can also be a large expense. Between auto insurance, maintenance, and gas, you might spend a lot of money in the course of owning a vehicle. This especially holds true if you wind up having to finance a car.

Now if you go that route, you're not alone. A good 73% of U.S. households have a car payment, according to a new doxoINSIGHTS report. Meanwhile, the average monthly car payment comes to $433 -- hardly a small amount.

If you need a car and can't pay for one outright, you may have no choice but to take out an auto loan. But here are some steps you can take to make that loan less expensive.

1. Boost your credit score

Your credit score says a lot about you as a borrower. The higher that number is, the less expensive it becomes to take out a loan. That's because when your credit score is high, it tells lenders you're not a very risky borrower -- and so you're likely to get rewarded for that in the form of a lower interest rate on a car loan.

If your credit score could use work, it pays to boost it before applying to finance a car. One of the best ways to raise your credit score is to pay all bills on time, which will improve your payment history. Whittling down credit card balances could also help your score increase, though that may not be possible -- especially if you're in the process of socking away money for a down payment on a car.

Another potentially easy way to boost your credit score? Check your credit report for errors. Correcting mistakes could leave you with a higher score quickly.

2. Don't buy a new car

Many drivers are lured into buying new cars that come loaded with cool features. But unlike other assets that tend to gain value over time, cars tend to lose value over time. And buying a new one could mean getting stuck with a higher monthly auto payment than you can comfortably afford.

Rather than go that route, explore your options for a certified used vehicle. You may find that you're able to buy a perfectly comfortable car at a much lower price point.

3. Refinance an existing loan if it has a high interest rate

Perhaps you took out your auto loan at a time when your credit wasn't so great. If that's the case, and you're now stuck with a higher interest rate on your loan, it pays to look into refinancing. That basically means swapping your existing loan for a new one with more favorable terms. If your credit score has improved substantially since signing that original loan, you might eke out a nice amount of savings.

Can you afford a monthly car payment of $433? Whether that sum fits into your budget or not, it pays to explore the different ways you can spend less. That way, you'll free up money for other things -- like gas costs, which have been soaring for weeks on end.

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