If you’ve ever bought anything on credit, you know how overwhelming the monthly payments can feel – a credit card, a financed household appliance, a new car. The high interest rates often applied to these items can make it feel impossible to get out from under the debt. For many, this is the barrier preventing them from buying an electric vehicle even though they want one. The vehicle loan payment just feels too steep when they could buy a gas vehicle instead.
It’s worth noting that you’ll save money on things like gas and vehicle maintenance – but we understand that that’s not usually enough to offset the higher monthly payments. At You.Car, the world’s most eco-friendly rideshare company, we’re focused on helping the everyday person make the switch to an electric vehicle because we believe that’s what’s best for the planet. That’s why we designed a micropayment program for drivers. Now, when you’re figuring out how to calculate vehicle loan payment totals for an electric vehicle, you have options to help reduce the monthly payment. What are micropayments and how do they help you cut your car loan in half? Let’s take a look.
The Benefits of Micropayments
Micropayments are smaller payments made to a loan company throughout the month rather than one lump sum on the due date. It’s a tried-and-true strategy for all kinds of debt, and now it can be easily applied to electric vehicle loan payments.
There are several draws to making small payments throughout the month:
- Avoid Late Fees: Making smaller payments throughout the month reduces the chance you’ll miss a payment entirely, thus incurring a late payment fee. Late fees, which depend on the company but can often be between $25 and $50, add up over the year. If you frequently pay your debt late, you could find that you rack up so much money in late fees that you could have made an extra payment on your debt.
- Pay Less Interest: Interest accrual varies by company and type of debt, but many companies will calculate interest based on your average daily balance. That means that if your daily balance remains at $25,000 throughout the month until you make your $500 payment on the 25th, you’re accruing a percentage of your interest on $25,000 each day. In contrast, if you pay $250 on the 10th and another $250 on the 25th, you’re only accruing interest on $24,750 from the 10th to the 25th. It might seem small, but compounding interest works against you, and micropayments make it work in your favor. Particularly if you weren’t able to secure a low interest vehicle loan, this benefit can help you keep those costs under control.
- Improve Your Credit Score: As mentioned above, making micropayments throughout the month reduces the chance that you’ll miss your due date, which would harm your credit score. Beyond that, micropayments improve your credit score because they reduce your credit utilization. Most financial advisors recommend that you keep your credit utilization below 30% – that means you never use more than 30% of the credit allotted to you. Your car loan will likely take up a large percentage of your available credit, so paying it down quickly (reducing your credit utilization) is essential to maintaining an improved credit score.
Now that we know why micropayments are good for you, let’s look at the three ways you can use You.Car to apply micropayments to your electric vehicle loan or lease.
3 Ways to Micropay with You.Car
If you’ve been hitting up every vehicle loan payment estimator trying to figure out if you can afford an electric vehicle — you’ve ended up in the right place. Our goal has always been to help the average person buy or lease an electric vehicle because we don’t think sustainability should be a luxury item. To do that, we built micropayment functionality into our rideshare app. When you drive for You.Car, you can opt-in to have money automatically transferred to your loan provider via our proprietary API.
Once you do that, you determine how you want to make those payments:
- Apply Tips: Gratuity is a standard part of the rideshare model, but it’s difficult to estimate exactly how much you’ll make in a given week because the amount is determined by the riders. Rather than factoring that uncertain number into your weekly budget, apply it directly to your car payment. Your tips will never reach your bank account, where you might be tempted to spend them on a night out – instead, they’ll immediately go to your loan provider to pay down your electric vehicle balance.
- Apply Savings: Electric vehicles come at a higher monthly cost, but they also come with built-in savings: no outrageous gas prices. Using your EV model’s unique specifications, You.Car will track how much money you’re saving in gas by being in an electric vehicle. Let’s say you saved $150 because your car runs on electricity. We’ll deduct that $150 from your earned wages and send it directly to your loan provider. The rest of your paycheck will go into your standard bank account, and your car loan will be $150 cheaper on the due date.
- Apply Additional Revenue Streams: We’re always innovating new ways for drivers to earn money and reduce their car payments. For example, you can choose to sell snacks and cold beverages to your riders, you can run in-car advertisements via a provided tablet, or you can advertise on the outside of your vehicle with a car wrap. Each of these comes with extra money, and drivers can decide to apply the money earned to their loan automatically.
Electric vehicles are the future of the rideshare industry – and they’re probably the future of the auto industry, too. With us, you can make the switch to electric vehicles now, saving you money on things like gas and vehicle maintenance while making the responsible choice for the Earth. Get started with You.Car today.
Contact You.Car to learn more about our advertising opportunities and loan repayment program: