3 Ways To Get A Deal On Your Auto Loan

23 February 2018
 Categories: Finance & Money, Blog

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When budgeting for a car purchase, you need to consider more than just the sticker price of the car. Your auto loan interest rate and terms will have a huge impact on how much your monthly bill is for the loan. You may end up paying so much in interest and fees that a car you thought you could afford becomes out of reach. Luckily, there are specific tactics you can take to get a better deal on your loan. Here are three tips to try:

Double Check Your Credit

The better your credit score, the better a deal lenders are likely to offer you on your car loan. For this reason, it pays to double check your credit score and report before applying for a car loan. If you notice any discrepancies, such as late payments that you know are inaccurate, contact the credit bureau directly to have it removed. This process will take extra time but it is worth the extra effort to make sure your credit is as high as it can be, instead of wayed down by false information.

Shop Around for the Best Rate

Even though your credit is a large factor in determining your interest rate, rates also vary greatly from one lending organization to another. Financing your vehicle directly from the dealership may be convenient, but this convenience often comes with the cost of a higher interest rate and more fees. Credit unions, online lenders, and smaller banks often offer lower interest rates to their customers. Just be sure to fully research the lender before you apply or sign any paperwork, to make sure the deal you're being offered isn't too good to be true.

Consider Paying More Per Month

Some lenders will try to convince you that a loan with a higher interest rate is still a good deal, by extending the life of the loan to artificially lower your payments. It is better to get a smaller overall loan, even if your monthly payments are a bit higher. Otherwise, you are at risk of still being in debt for your vehicle several years from now, and possibly owing more than the car is worth if you want to sell it. As long as you can fit a payment into your monthly budget, it is usually wise to go for the shorter loan term since you will pay much less interest overall.

Following these tips when applying for a new car loan will help you snag a better deal and save significant money over the life of your loan.