Car loans are expensive, and it’s often tough to make monthly payments after you’ve purchased your vehicle. While it won’t eliminate the cost of your car loan, you can save money by taking the time to learn how to negotiate a lower car loan rate with your lender. Keep reading to learn more about this topic.
Be Prepared and Know Your Finances
According to Lantern Credit, “The first step in negotiating for a lower rate is knowing your current interest rate.” You can log into your account or call your loan provider. Some will let you know over the phone and then give you that lower rate when you log back in; others will send it via email or text message. With that information, you can be prepared with some alternative offers.
Research Auto Loans and Interest Rates
If you’re looking for a new car, it pays to shop around. Comparing auto refinance rates at different lenders can help you find one that meets your needs and offers competitive terms and conditions. Interest rates for car loans vary widely depending on several factors such as credit score, income, and down payment. To secure low rates, it’s best to start shopping early. Researching auto loan companies online gives you an idea of what they offer.
Seek Out a 3rd Party Source To Help You
As you start looking at car loans, one of your first steps will be to request quotes from banks or other financial institutions. If you’re getting pre-approved, they should be able to offer you a good rate—but they may not be willing to negotiate on it. The next step is negotiating with dealerships, which may be more open (or more flexible) about lowering rates and terms for specific customers.
Find Other Ways to Reduce Your Auto Loan Interest Rate
You may be able to reduce your interest rate by 0.25 or even 0.5 percent just by putting in some extra work and effort. So if you’re paying for car insurance every month, consider switching from your current provider to one of their competitors. Some providers will offer you as much as 5 percent off your loan rate when you do so.
A Low-Interest Rate Doesn’t Necessarily Mean You’ve Got the Best Deal
A lower interest rate on your car loan could help you get that new vehicle, but it doesn’t necessarily mean you’ve got the best deal. Each individual has different financing needs and wants, so make sure you shop around. Before you sign, make sure to review all of your options with local dealerships and lenders in order to find out what is available for your personal financial situation.
If your credit isn’t in great shape, you may be tempted to finance a new car at whatever rate you can get. Don’t do it. You end up giving thousands of dollars more than necessary in interest over your loan term. Before you settle for an interest rate that doesn’t reflect your good standing, negotiate—it’s likely easier than you think.
You can lower your car loan rate by negotiating with your lender. Your credit score is an important factor in determining interest rates. But don’t let that discourage you from asking for a better deal.