If you want to cut the fat from your budget, look at your car costs to find plenty of ways to economize.
Use this total monthly car cost calculator to see how much you’re really spending. Then consider these tips to find savings.
For many people, a car payment is one of their biggest monthly expenses. To reduce this cost, you could:
Refinance your car loan. If you’re paying too much in interest or your credit has improved, you likely will be able to lower your car payment by refinancing your car loan. Even if you can’t get a better rate, extending the loan term can lower your payments, although, in the long run, you’ll pay more in interest.
Downsize to a less expensive car. If your car payments are breaking the bank, sell your car and drive something that fits your budget. Do this wisely, though, or you might lose a lot in the transition. Trading in your car is convenient, but selling privately will get you the best price. Advertise your car on classified sites such as Autotrader or eBay Motors.
“Swap” out of your lease. If your car lease payments are a burden, try to get someone to take over your contract, using sites like Swapalease or Leasetrader. Of course, you won’t have a car any longer. But after you escape the high lease payments, you can shop for something affordable.
Competition in the industry puts you in the driver’s seat when shopping for the best car insurance rates. Still, you should examine your policy once a year.
Here are a few ways to save on car insurance:
Use every discount available. Review your policy and make sure you’re getting all the savings you qualify for — good-driver discounts, home and car discounts, loyalty discounts and savings for certain occupations such as teachers and engineers.
Clean up your driving record. Order a copy of your driving record from the DMV to see if you have any violation points or outstanding tickets. When your record is clean, make sure your insurance company gives you credit for it, hopefully with a lower rate.
Drop collision coverage. If you’ve got a clunker, it might be time to drop collision and comprehensive insurance coverage, which pays for damage to your vehicle.
Increase your deductible. Our research found that raising the deductible from $500 to $1,000 saved about $200 a year, on average.
Gas prices have been low for several years, but they’re volatile. Knowing some gas-saving strategies means you’ll be ready if prices soar.
Here’s an overview of our top gas-savings picks:
Change your driving style. Tests by Edmunds.com showed that the key to major gas savings was right under your foot — your own driving habits. The top offender: rapid acceleration. Driving moderately, instead of aggressively, for example, reduces fuel consumption by over 30% — which means a 30% savings on your fuel costs.
Buy wisely. Does it make sense to drive across town to save a few pennies per gallon? Instead, use a tool like GasBuddy to find a good station that’s along your commute to work.
Tune your car. Some simple maintenance can easily pay for itself. Inflating your tires to the proper level each month not only saves gas but reduces tire wear. Oil changes and replacing the air filter also improve fuel economy.
Stop buying premium. Experts say there’s no advantage to buying premium gas unless it’s required for your car (as stated in the owner’s manual). Regular gas has plenty of detergents and additives to keep your car running cleanly.
Purchase a gas sipper. It may not be worth ditching your current ride for a more fuel efficient car since it’ll take years to make up the cost difference. But if you’re shopping for a new car, put fuel economy at the top of your list of must-haves.