How to Get a Good Interest Rate for a Car Loan

When searching for the best car loan, it is important to not rush into any decisions. Figure out exactly what type of payment term you want for the loan. A short-term loan will keep the interest you have to pay low. You can get a longer-term loan in order to have smaller monthly payments. Decide how much of a down payment you can afford. The amount of the down payment will affect the monthly payments of the loan. Below are some pointers that will help you to get a good interested rate for your auto loan.

Difficulty: Moderate

Instructions

1. Take the time to shop around. Do not just rely on the car dealership. See what rates credit unions and banks can offer. Credit unions often have lower rates than banks do.

2. Choose the loan with the shortest term that you can afford. Your monthly payments may be higher, but you will save a ton of money in the long run by paying less interest. Banks often will also offer better interest rates for short-term loans.

3. Be sure to not tell the dealer what you want your monthly payment to be. They may adjust the price of the car or terms of the loan to meet your figure, but it is most likely to benefit them not you.

4. Find out if you can get pre-approved for an auto loan through your bank. You will have much more leverage to negotiate with the dealer if you already have the loan.

5. Avoid loans that do not require a down payment. Without a down payment, your loan will be very high and you will pay a lot of money in interest in the long term.

6. Check out online loan companies. They often offer interest rates that are the lowest possible. All you have to do is fill out an online form, and you will receive your loan estimate.

Tips & Warnings

• Always take the time to think about every aspect of the loan and car purchase price. A dealer may offer a low interest rate but then raise the price of the car in order to compensate.

Resources

• Auto load guide
• Auto financing