Car ownership is expensive. From the initial outlay to ongoing costs like fuel and maintenance, it’s no wonder most of us worry about how we’ll afford our car. Whether you lease, finance, or pay cash for your car, there are lots of opportunities for saving money. You probably know that using public transportation and walking or biking to work can save on car expenses. But there are many other ways to cut your car costs without giving up that sweet set of wheels. Read on for 5 ways you might not have thought of saving money on your car.
Refinance your car loan
The first step to lowering your car costs is to examine your existing car loan. Car loan refinancing may help you lower your monthly payments, allowing you to deposit more money into your savings goals. You can switch to a new lender that may offer lower interest rates, cheaper fees, or more payment options. When done correctly, car loan refinancing may help in saving money. You must weigh the pros and cons before deciding if refinancing your car loan is a good idea.
Check out five ways refinancing your car loan could help you in saving money and put cash back in your pocket.
1. Lower your interest rate.
If you’ve made regular, on-time payments to your loan, they’ve likely had a positive effect on your credit score. Plus, if you can now afford to pay off your loan in a shorter term, those rates may be lower than when you originally took out your loan. If your credit score has increased, or rates have dropped, we could potentially lower your rate and it could end up in you saving money.
2. Lower your payment.
As you’ve been making regular payments, your principal balance has gone down. You could refinance for a lower payment at a longer term and free up your cash flow. Keep in mind that you’ll continue to pay interest for the duration of your loan. This option will give you more cash up front, but you may end up paying more in finance charges in the long run.
3. Consolidate other, higher-interest debt.
If a credit card or other unsecured debt has you stressed, consider rolling those balances into your car loan. Typically, you can find lower rates because your loan would be secured with your vehicle, and you may be able to finance up to 80% of your vehicle’s value, with approved credit. You no longer need to worry about making several different payments; you’d only have one to make each month. The key to consolidating debt is to stop using those cards once you transfer the debt to a new, fixed loan.
4. Take advantage of discounts.
When you have everything in one place, often you get special discounts. At Mwananchi Credit, you can qualify for a discount of 0.5% off your rate if you sign up for automatic payments to your loan. It’s worth asking about when you are inquiring about a loan. It also makes sense to watch for promotional rates.
5. Shorten the term of your loan.
Perhaps when you first applied for your auto loan, your income wasn’t as high as it is now, so you went with a longer term to keep your monthly payments a little lower. By refinancing, you can lower your term to help pay off your vehicle a little quicker. Over time, you end up saving money on interest. Be sure to check that your lender does not have a fee for paying off your loan early.
If you need assistance calculating whether it will work for you, contact us at Mwananchi Credit Ltd to enjoy an affordable, fast and hassle-free car financing
Review your car insurance policy
There are lots of variables at play when determining what kind of car insurance coverage you need, and how much it should cost. Comprehensive car insurance is often the next highest ongoing car expense that could be eating into your savings. Most people choose their car insurance based on what their parents had or what their friends use. But your car and your driving record impact your car insurance rates just as much as those things. The majority of insurance companies use a computer program to calculate your rates based on statistics. All of this is to say that it’s worth taking a few minutes to review your car insurance policy and see if there are ways of saving money.
Be proactive with your car maintenance
Regular maintenance can help you avoid expensive repairs down the road. Your car’s service schedule and owner’s manual will recommend how often you should have your car inspected and what kind of maintenance you should have done. Getting your car serviced can be pricey, however leaving a problem too late only exacerbates the problem in many cases, costing you more. There are also some easy car maintenance jobs you can do yourself to save on repair costs. These include;
- Keep your car properly tuned. If your car is making strange noises or feels funny don’t sit back and hope it goes away. Tuning your car regularly helps you preserve your car for longer and increase its power output, handling and speed. Keeping on top of when your car needs tuning can reduce fuel usage by 25% or more each year, saving you lots of money down the road.
- Change the oil and oil filter according to your car manual. Over time, your oil will break down and your filter will become clogged with contaminants. Changing your car’s oil is one of the most important things you can do to avoid bringing large bags of money to your mechanic later on. Generally, you should check your oil every three months, or every 5,000 kilometres but it depends on the car usage.
- Check the air filter monthly. A dirty filter drags on engine efficiency and reduces your fuel mileage by up to 10%. Air filters are inexpensive and very quick to replace, so you can do this routine maintenance yourself and save.
Once you have a car loan, you have to budget for maintenance. But when you are budgeting, don’t forget to factor in what repairs you might need and how much they could cost to help in saving money.
Save costs on Fuel: Don’t Overlook the Benefits of a Hybrid or Electric Vehicle
With the recent rise of fuel prices in Kenya following the removal of the petroleum subsidy by the new government, you need to come up with new ideas of saving money on fuel prices. These include;
- Drive responsibly. One of the quickest ways to waste fuel includes speeding, rapid acceleration and hard breaking. Aggressive driving can reduce your fuel mileage by 25%
- Keep your engine properly tuned. The short-term costs of properly maintaining your vehicle can improve your gas mileage by an average of 4%, though results vary depending on based on how well your car is already running
- Keep your tyres pumped up. Regularly checking your car’s tyre pressure will prolong the life of the tyre and improve fuel efficiency. Driving on underinflated tyres isn’t just dangerous, it also uses more fuel.
Switching to an electric car isn’t an option for everyone and electric vehicles are no silver bullet when it comes to reducing the cost of living, but it’s a move that’s guaranteed to cut your fuel costs.
Hybrid electric vehicles (HEVs) typically use less fuel than similar conventional vehicles because they employ electric-drive technologies to boost vehicle efficiency. Electric vehicles can reduce fuel costs dramatically because of the high efficiency of electric-drive components and this helps in saving money. Because all-electric vehicles rely on a whole or part of electric power, their fuel economy is measured differently than that of conventional vehicles.
Don’t be afraid to carpool
If you already have a car, you might be able to save money by carpooling with your co-workers. If you don’t want to carpool, or can’t find someone to ride with, you can use apps like Lyft or Uber to get to work for much less than taking your car to work since you reduce daily charges like parking fees and help a bit in saving money for your daily expenses.
Car ownership is expensive, but it doesn’t have to be. By being proactive with your car maintenance and taking steps to find the best car insurance, you can reduce costs and avoid being one of the many Kenyans who can’t afford to drive.