How to Get a Low Interest Auto Loan

Are you looking to finance a new or used car, but don't want to pay a lot of money? Aside from choosing an inexpensive automobile, there are ways to save money on an auto loan. The key is getting approved for a low interest rate, which keeps monthly payments affordable.

Difficulty: Moderately Easy

Instructions

1. Improve your credit. Applicants with an excellent credit history qualify for the best auto loan rates. Before submitting your application, request a free copy of your credit report from Annualcreditreports.com. Examine the report and look for inaccurate information, and take note of areas that need improvement. Paying off debts and paying bills on time can add points to your FICO score.

2. Save money for a down payment. If you want to acquire the best interest rate, save money for a down payment. When determining an interest rate, auto lenders take several factors into account. Having upfront cash for a down payment may warrant an interest rate decrease.

3. Find a co-signer. Ask a spouse, parent or sibling to co-sign the loan. This will improve your approval odds, and you may be able to acquire a lower interest rate on the auto loan.

4. Choose a shorter loan term. The typical auto loan has a five-year term. However, selecting a shorter term - perhaps two, three or four years - can result in a lower interest rate. Unfortunately, a shorter term increases monthly payments. But it's the perfect solution for people who have the available cash.