A car loan is a big financial commitment, so it’s important to do everything you can to get the best deal possible. Here are six tips to help you save money on your next car loan.
- Shop around for the best rates. Don’t just go with the first lender you find. Compare rates from multiple lenders to make sure you’re getting the best deal.
- Get pre-approved for a loan. This will give you negotiating power when you’re at the dealership. The dealer will know that you’re serious about buying a car and that you’re not going to be taken advantage of.
- Don’t extend the loan term any longer than necessary. The longer the loan term, the more interest you’ll pay over the life of the loan. Try to get a loan with as short of a term as possible.
- Make a large down payment. The bigger your down payment, the smaller your monthly payments will be. If you can swing it, aim for 20% or more of the purchase price. Be mindful of your loan to value ratio to keep your interest rate low.
- Pay off the loan as quickly as possible without incurring any penalties. Many loans have prepayment penalties, so be sure to check before making extra payments. But if there are no penalties, paying off the loan early will save you money on interest charged on daily basis terms of interest charged daily—so it’s definitely worth considering if you can afford it!
- Refinance if rates drop later on down the road After taking out an auto loan, keep an eye on interest rates in case they drop later on down the road Refinancing could help you save money by getting a lower rate on your outstanding balance—so it’s definitely worth considering!
Be sure to compare rates and fees from multiple lenders before refinancing, though, as some lenders may charge high fees for doing so. Plus, It may not always be possible to refinance if your credit score has dropped since taking out the original loan, but it’s still worth checking into. It’s also worth comparing rates and fees from multiple lenders before refinancing—as some might charge high fees for doing so.
A car loan is a big financial commitment, but there are ways to save money on your next car loan by shopping around for the best rates, getting pre-approved, making a large down payment, and paying off your loan as quickly as possible without incurring any penalties.
If interest rates drop later on down the road, car loan refinancing could also help you save money by getting a lower rate on your outstanding balance—so it’s definitely worth considering! Just be sure to compare rates and fees from multiple lenders before refinancing.