How to Get a Lower Interest Rate on Your Car Loan

If you’re looking to get a lower interest rate on your car loan, there are a few things you can do. You can start by checking your credit score and making sure it’s in good shape. You can also try to get a cosigner with good credit to help you get a lower interest rate. Finally, you can shop around to different lenders to see who can give you the best interest rate.

Shop Around for the Best Rate

The first step to getting a lower interest rate on your car loan is to simply shop around. The easiest way to do this is to use an online lending marketplace like LendingTree. You can fill out one short form and get multiple loan offers from competing lenders all at once. Then, you can compare the rates and terms side by side and choose the best one for you.

Of course, you can also shop around for a car loan by going directly to different banks, credit unions, or online lenders. But this takes a lot more time and effort, so using a lending marketplace is usually the best option.

Once you’ve found a few lenders that seem like they might offer a good interest rate, it’s time to start getting some real numbers.

Get a Co-Signer

If you can’t get a lower rate by shopping around, see if you can get someone to co-sign your loan with you. A co-signer is somebody who agrees to be responsible for the loan if you can’t make the payments. This could be a parent, other relative, or friend.

The co-signer will need to have good credit themselves. And keep in mind that if you don’t make your payments, it will damage their credit as well as yours. So only ask somebody to co-sign if you’re confident you can make the payments.

Improve Your Credit Score

You can improve your credit score in a number of ways, but ultimately, it comes down to making all your payments on time and keeping your debt levels low. You can get a free credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion — once every 12 months through AnnualCreditReport.com. By law, the credit bureaus must provide you with a report if you request one.

You can also check your credit score for free through Credit.com, which will give you an idea of where you stand and also provide advice on how to improve your score. Once you’ve reviewed your credit report and score, take steps to improve your credit by paying down debt and making timely payments on all your bills. A higher credit score will likely result in a lower interest rate on your car loan.

Put Down a Large Down Payment

One thing you can do to lower your car loan’s interest rate is to put down a large down payment. Auto lenders often see borrowers who put down large payments as less of a risk. As a result, these borrowers often get lower interest rates.

If you don’t have a lot of cash on hand, you can still put down a sizable down payment by trading in your old car. Most dealerships will give you credit for your trade-in, which can be applied to your new car’s purchase price.

Another option is to get a personal loan from your bank or credit union. You can then use the loan proceeds as a down payment on your new car. Personal loans usually have lower interest rates than auto loans, so this can be a good way to save on interest. Just be sure to compare rates from multiple lenders before you choose one.

Choose a Shorter Loan Term

One way to lower your interest rate is to choose a shorter loan term. Your loan term is the amount of time you have to pay back your loan, so a shorter term means you’ll pay it off faster. That also means you’ll have a lower interest rate, because the interest is calculated based on the amount of time you have the loan.

A shorter loan term also means you’ll have a higher monthly payment, but you’ll save money in the long run because you’ll pay less interest. If you can afford it, a good rule of thumb is to try to pay off your car loan in three years or less.

Conclusion

If you’re car shopping, you may be wondering how to get a lower interest rate on your loan. After all, the lower the rate, the less you’ll pay in interest over the life of the loan.

There are a few things you can do to get a lower rate. First, shop around at different lenders to see what rates they’re offering. Second, if you have good credit, you may be able to qualify for a lower rate. And third, you can try to negotiate with the lender for a lower rate.

If you follow these tips, you may be able to get a lower interest rate on your car loan and save money in the long run.

How to Get a Lower Interest Rate on Your Car Loan

Introduction