Car loan repayments can be surprisingly steep especially when you add the ongoing costs of car ownership on top of it all. When they crunch the numbers on a car loan repayment calculator, potential car buyers may be disheartened by their estimated car payments. But don’t get disheartened! If you want to pay less on your repayments, there are a few ways you can go about it. Here are a few tips and tricks you can try to lower your car loan payments: 

Pay a higher initial deposit 

The more money you put into your car loan deposit, the less you need to borrow from the lender. This leads to lower monthly repayments as a result. Another advantage is lowering the overall cost of the loan as you’re paying less in interest. 

Usually, car loans don’t require a deposit so putting down as much as your budget allows can go a long way, even if it isn’t much. This is one of the simplest and most economical ways to reduce your car loan repayments. 

Opt for a balloon payment 

Balloon payments are lump sum payments made at the end of your loan’s term. This is the opposite of a deposit or downpayment. Instead of paying upfront, you’ll pay off the rest of your loan balance when your loan is over.  

This option allows borrowers to reduce the cost of their repayments immediately. Since the balloon payment is required only at the end of the loan, you’ll have plenty of time to prepare and save up. 

A disadvantage of a balloon payment is the accrued interest. You may have to pay more interest over the life of the loan if you choose a car loan with balloon payment. 

Make more frequent loan payments 

Instead of the standard monthly payments, consider a weekly or fortnightly repayment scheme. Small and frequent repayments can be more manageable compared to one big monthly repayment. This structure allows you to save on interest, albeit minimally. 

Interest on car loans is calculated daily. On a monthly scheme, the interest on the principal amount left is incurred for 30 days. However, when you pay weekly the interest accumulates for only seven days. And because you bite a small chunk of the principal amount every week, you end up paying less and less on interest as the term reaches its end. 

Choose a longer car loan term 

If your primary concern is to make the repayments smaller each month, the easiest way to do this is by choosing a longer term. Because the principal is spread out over a longer period, the repayments will become smaller and easier to budget. However, you will pay more on interest over the life of the loan. 

The standard car loan term is three to five years. You may have trouble finding lenders who are willing to offer longer loan terms. At Aussie Car Loans, we have a network of trusted lenders around Australia. We can find you a loan with terms tailored to your needs. Get in touch with us today to learn more. 

Refinance your car loan 

If you’ve already taken out a loan, you don’t have to stick to your high repayments until your loan term (or budget) runs out. You can get out of a high-interest car loan through refinancing. Essentially, car loan refinancing means switching from your current loan to a new one from a different lender.  

A new loan could offer a better deal so you can save on interest and pay less over the life of the loan. If you find a car loan with lower rates and more favourable terms, you may be better off changing loans.  

Take note, car loan refinancing isn’t without downsides. You may have to pay additional costs such as application fees to your new lender and exit fees to your old one. Before jumping ship, calculate the costs with care to make sure that you will end up paying less, not more, in the long run. 

Find the right car loan 

The type of car loan you get will affect your repayments. For the lowest repayments possible, you need to find a car loan with low-interest rates and favourable terms and features.

Aussie Car Loans can help you find the right car loan, whether you’re in the market for a new or used car. Call 1300 889 669 today or get a pre-approved loan for your next car. 


How much should I spend on car loan repayments? 

It depends on your finances. Ideally, your total car expenses including fuel, maintenance, insurance, and the like shouldn’t be more than 15% of your monthly income.  

Is it better to pay for a car loan monthly or fortnightly? 

Each option has its pros and cons. Monthly payments are standard and may make it easier for borrowers to budget. On the other hand, fortnightly payments can help you save on interest and own your car sooner. 

What affects the monthly payment of a car? 

The interest rate, frequency, loan term, deposit, and balloon payment determine your car loan repayments.

Is refinancing a car loan a good idea? 

If you want to lower your interest rates or take advantage of better loan features, a car loan refinance may be beneficial. Before switching lenders, review your finances to see if it’s the best course of action. 

Can I lower my repayments without refinancing? 

It is possible to modify your loan with your current lender. You could ask for lower interest rates or extend your loan term to decrease repayment. Approval for a car loan modification is up to the lender’s discretion.  

Can you pay off a car loan early? 

Yes, you can pay out your car loan early, but you may have to pay extra fees. 

Can you claim your car loan repayments on your taxes? 

If your car is used for business purposes, you may be able to claim the interest on your car loan repayments on your taxes. Consult with a professional to ensure you’re eligible for this tax advantage. 

How can I repay my car loan faster? 

You can repay your car loan faster by making more frequent repayments or extra repayments.