3 Ways to Lower the Cost Of A Car Loan

Are you thinking about buying a car, truck, or SUV? A car loan can help you pay for the purchase. That said, with interest, car payments can amount to a lot. But don’t worry! By following these clever hacks, you can reduce the cost of a car loan and make your new vehicle more affordable.

Check Your Credit Score

Your credit score plays a major role in the rate and terms of your loan. If you have perfect credit, you will be offered a competitive rate of interest. But if you have less-than-perfect credit, you may have to pay a lot more. So, if your credit score is not the best and you don’t have to purchase a car right away, it’s best to wait until your score increases. Just a small increase in your credit score can save you a lot of money over the life of your loan.

Don’t Make the Mistake of Borrowing Too Little

It may be tempting to get an auto loan when you buy a new car. But it’s not always the right choice. If you only need a few thousand dollars for a car, don’t apply for a loan. Banks want you to borrow money so they can make money off of you. When you get a tiny loan, banks charge a lot more because they don’t want your loan paid off quickly. So, rather than apply for a car loan for a few thousand dollars, consider saving up.

Compare Your Options

​​​​After you find the car you want, your car dealer will want to set you up with a loan or lease. The dealer makes money on the deal by offering these products that they get either from banks or auto finance companies at slightly higher rates or by increasing the closing cost of the loan. There are financing companies that offer loans at better rates than what dealers offer. If you’re looking for the best rates, do your research! Consider lending sources other than those offered by your car dealer. These include online banks, credit unions, peer-to-peer lending, etc.