How to Lower Your Car Payments Before You Even Buy a Car

Saving money begins with comparing apples to apples.

2022 Toyota CorollaToyota

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Falling in love with a car can be brutal on your finances if you don’t do the research before someone jingles a pair of car keys in front of your face, or if you don’t read the fine print before you sign a contract. A car purchase can be filled with loopholes, gotchas, and painful bait-and-switch tactics if you’re not careful. Luckily, doing a little research on how to lower your car payments (before you buy) can save you money in the long run.

Sometimes getting a good deal means knowing where to look. This is how to avoid the wrong temptations and find the right car for you.

Always Arrange Your Financing Beforehand

Just by searching the Internet for “auto financing,” you should see a long list of banks and credit unions that offer competitive rates. Reviewing financing options with one of these institutions, and maybe even nailing down a specific interest rate or range is a good idea before you even test-drive a car.

In addition, many local banks list their rates online, which can give you a basic range of the interest rate you can expect once you’re ready to buy that car. Even if you’re just looking for now, researching current rates can save you thousands once you’re ready.

Always Get the ‘Out-the-Door’ Price

Some dealers have a bad habit of offering a low price online, only to inflate the price with a bunch of extra fees on top of the advertised price.

Whether you’re on the phone or shopping in person, always ask for the “out-the-door” price. This should include tax, tag, title, and registration costs along with any fees that the dealer may not have included in their advertised price.

Pick the Sedan Over the SUV

Even without $4 per gallon of gas, the average SUV is still far more expensive than a car with similar options and accessories. Small vehicles are a great example of this. The average price of a new subcompact SUV is nearly $30,000 now, while the majority of subcompact cars rarely cost more than $20,000.

This price difference extends to larger new cars and SUVs. For example, the 2022 Toyota Corolla LE compact car now starts at a Total MSRP of only $22,000, while the Toyota RAV4 LE compact SUV begins at almost $28,500. That $6,500 price difference can become even greater with high-end trim levels usually costing thousands more on SUVs versus a comparable car.

Customize After You Buy

There are plenty of other excellent ways to lower your car payment. If you like to customize, aftermarket accessories such as backup cameras, infotainment systems and leather seat coverings can often be bought and installed for a fraction of that new car price premium. The same can be said for floor mats, phone charging systems, and alloy wheels. Opting for a lower-trim model, whether new or used, gives you the freedom to spruce up a less expensive vehicle to your liking without paying thousands more up front.

If you want a lower car payment, try these three simple tips:

  • Research the lowest financing rates available to you
  • Always get the “out the door” price
  • If you really love getting a good deal, opt for the lower-trim version of what you like and customize it to become exactly the car you want it to be
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Steven Lang
Steven Lang is a special contributor to Capital One with nearly two decades of experience as an auto auctioneer, car dealer, and part owner of an auto auction. Some of the best-known auto publications turn to him for his expert insight. He is also the co-developer of the Long-Term Quality Index, a survey of vehicle reliability featuring over two million vehicles that have been inspected by professional mechanics.