How to Lower Your Interest Rate on a Car Loan

If you’re looking to lower your interest rate on a car loan, there are a few things you can do. Check out our tips and see if you can save some money.

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Introduction

An auto loan’s interest rate is the cost you pay each year to borrow money expressed as a percentage. The interest rate does not include fees charged for the loan.

You can get an auto loan with a lower interest rate in several ways, including negotiating with the lender, choosing a different type of loan, or refinancing your existing loan.

How to Lower Your Interest Rate on a Car Loan

If you’re looking to lower your interest rate on a car loan, there are a few things you can do. You can start by improving your credit score. You can also shop around for a better rate, and try to get pre-approved for a loan. You can also refinance your loan to get a lower interest rate. Let’s take a look at each of these in more detail.

Get a cosigner

One way to get a lower interest rate on a car loan is to find someone with good credit who is willing to cosign on the loan with you. A cosigner agrees to be equally responsible for making the monthly loan payments if you cannot make them. Because the cosigner is assumed to be equally responsible for the loan, their good credit score will help you qualify for a lower interest rate. Just be sure that you can actually afford the car loan payments before you ask someone to cosign — if you default on the loan, it will damage their credit as well as yours.

Have a large down payment

One way to lower your interest rate on a car loan is to have a large down payment. This tells the lender that you’re less likely to default on the loan, and they may be willing to offer you a lower interest rate as a result. Having a down payment of 20% or more is ideal, but even 10-15% can make a difference.

Have a good credit score

One of the best ways to lower your interest rate on a car loan is to have a good credit score. If you don’t know your credit score, you can check it for free with Credit Sesame. A good credit score is generally considered to be 700 or above. If your credit score is below this, don’t worry, there are still things you can do to lower your interest rate.

Get a shorter loan term

If you’re looking to lower your monthly car loan payment, you can do so by choosing a shorter loan term. A shorter loan term means you’ll have to pay off the loan balance in a shorter amount of time, which also means you’ll pay less in interest over the life of the loan. Of course, this also means that you’ll need to come up with a larger down payment to finance the purchase.

Conclusion

If you have a high interest rate on your car loan, there are a few things you can do to try to lower it. You can start by trying to refinance your loan with a new lender, which may give you a lower rate. You can also try negotiating with your current lender for a lower rate. If you have good credit, you may be able to get a lower rate by shopping around to different lenders. Finally, you can try making extra payments on your loan to pay it off more quickly and reduce the amount of interest you pay.