5 Ways to Get Cheap Car Loans

Filed in cheap car loans on Oct.15, 2008

Because many people change cars as often as clothes the need for cheap car loans is pretty high. Even if you don’t switch cars this frequently you probably want to get the cheapest car loan possible when you do buy a new car. Well then how do you find a cheap car loan?

First of all, don’t simply accept the initial offer. If you do some research and check with various lenders you’re likely to find a better car loan. You’ll find that the competition in the car loan business is pretty fierce which makes it much easier for you to find cheap car loans and save money.

Here are 5 tips to make it easier for you to get cheap car loans.

Do Your Research

The fact that there is so much completion for auto financing works to your advantage. With so many lenders out there trying to get your business you are in the driver’s seat and can accept or reject whatever loan you like. The best way to find cheap car loans is by getting out there and contacting several lenders to get quotes. Then take those quotes to compare the interest rates, fees, terms and other features to determine which loan is the best for you financially. This step will take some time, but the results are well worth it. To save time with your research do it online. Online auto lenders will get you instantaneous quotes in many cases, saving you hours of time.

Improve and Maintain a High Credit Score

Getting a good interest rate on a car loan is a piece of cake if you have a high credit score. So, the first thing you should do before going car shopping is to check your credit score and make sure it is high. Anything over 700 should get you a cheap car loan. If it’s below that you may want to consider taking a few months to improve it or you could end up paying more than necessary in interest.

It’s actually pretty simple to improve your credit score, it simply takes time. Pay all your bills on time and close any unnecessary accounts. Check your credit history to be sure there is nothing on there that doesn’t belong. Remember, the higher your credit score, the lower your interest rate and this applies to all kinds of loans, not just car loans.

Have a Trade-in or Large Down Payment

These will help you get cheap car loans in two different ways. First of all, the more money you’re putting down on the car purchase, the less you have to finance and that means lower monthly payments. Plus, many lenders will offer you a lower interest rate if your down payment is large enough. So, your down payment does double duty.

A trade-in functions pretty much the same way as a down payment, decreasing the cost of your new car purchase. Sometimes you can get a good trade value from the dealer, but you may be able to do better if you sell your old car privately.

Get Your Car Loan Before You Go Car Shopping

Most if not all car dealers offer some sort of financing, but that doesn’t mean that it’s good financing. Now I’m not saying you can’t get cheap car loans from an auto dealer, but chances are you won’t get the best deal on a loan from them. Additionally, you’ll be in a much better position to negotiate the car purchase if you already have financing since the car salesman will see you as a cash buyer. This alone can save you a couple thousand dollars on your next car purchase.

Don’t Let the Salesman Talk You Into Things You Don’t Need

Car salesmen make their living on commission from selling cars. This by itself should tell you that the salesman doesn’t have your best interests at heart when they are suggesting add-ons and upgrades to your vehicle purchase. Often the salesman will try to upgrade you to a more luxury model, but consider carefully how this will impact your budget. If you want to get cheap car loans you may need to exercise some willpower when dealing with the car salesman.

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