Have you finally made your mind about getting a car? Good, but have you evaluated your financing options? If not then you might want to see the following guidelines. These tips will help you get a low-interest rate on your auto loan.


This only sounds simple; itmaybe your biggest challenge when it comes to auto loans. Remember, a salesman has to deal with tricky conversations every day; theyare more than prepared for you.

Instead, you have to prepare yourself to be bombarded with questions such as “how much you are going to pay each month?”, or “what payment option you are going to choose.”

Salespeople love to negotiate prices and payment options. This is because they try their best to set the price based on amaximum monthly payment that you will pay willingly.

If you fall for this, you may end up paying more than the whole car is worth. So you have to negotiate the price instead of your car payments.

Short Loan

Auto loan companies have come up with rather creative ways to lower your monthly installment, but lowering your monthly payment means you add up the number of installments.  Today, you can extend your loan to 7 years.

This is insane because your car will be a big chunk of its value within five years. Therefore, the maximum term should be fouryears, because at least your car will attain its value this long. If four years is difficult, then you should extend to 5 years, but don’t extend it more than 60 months.

Skip the Niceties

When you are working on a loan deal, you need to keep your costs to a minimum. This is why you have to skip all extras. If financers have it their way, they make you buy every available option including:

  • Rust Proofing
  • Fabric Protection
  • Paint Protection
  • Alarm
  • Extend Your Warranty
  • Gap Insurance, Etc.

These options are great tools for ripping off their customers. The irony is, if you search the aftermarket like used auto loan, you will find such options at a much better rate. The fact is, most of these options are not important.

You don’t need rust protection; you can apply for protection yourself for a quarter of theprice. Likewise, gap insurances are sold to credit unions for affordable rates.

Avoid High-Interest

Credit score has adeciding factor when it comes to evaluating your interest rate. Just because your credit score isn’t as good as you wanted it to be, it doesn’t mean you have to bear with a high-interest rate. If you have a good rate, your APR will be a single digit. The Highest point is 10%-12%.

If you have bad credit, then you may have to bear with 15% interest rate, if it’s really bad, then you have to pay 25%. It shouldn’t be higher than this, and if you get such an offer, you better walk away from it. Despite your credit score, it’s not worth paying a mountain of interest.


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