It happens to so many of us when we go car shopping that the excitement of getting into that new car takes over and our emotions end up putting us into a car and monthly car payment that’s more expensive than we planned for. Instead of focusing on saving money and getting a cheap car loan we focus on the excitement and emotional boost that we get from a new car purchase.

Interest rates will vary depending on your lender of course, but some people end up with rates in the high teens which is crazy, even if you’re financing a car with bad credit. There are simple ways to keep your interest rate down, the most important of which is to take the time to compare rates from several auto lenders. You’ll also find that the length of the loan, the amount of the loan and your credit score will have an impact on your loan interest rate.

Once you’re into the new car you do have some options to lower your interest rate and monthly payments. Car refinancing can drop the interest rate by several percentage points and save you thousands of dollars over the life of your loan. And of course you’ll have lower monthly payments which will be a help to your budget.

Think of this, a car loan for 20,000 financed for 60 months at 12.5% will cost you $449.96 a month and $6997.53 in interest alone over the 60 months of the loan. If you refinance the car loan at a much lower rate of 6.99% your monthly payment will drop by over $50 and you’ll save over $3200 in interest. Pretty good reason to look into car refinancing isn’t it? Plus you’re payments are likely to be even lower than that since you’ll be refinancing less than the original $20,000 because you’ve already been making payments on the loan.

The usual financing rate for a new car with good credit is 7.99%, but you can find lower rates on a refinancing because the loan amounts are smaller and the duration is shorter. And you’ll be able to shop around so you could find an excellent interest rate. Car refinancing is certainly easier online and it’s less stressful than the initial purchase finance at the dealership.

You’ll also want to consider the full terms of the loan. Is it possible to repay the loan early in full or will you incur a fee for doing this? Make sure you read the fine print when you’re getting quotes for an auto refinance. You should also know that you can refinance your car even if you have bad credit. You may get an interest rate that’s a bit higher than you would get with good credit, but it should still be lower than the current interest rate, especially if you had bad credit when you initially bought the car.

Car refinancing is just a good financial move. Anytime you can lower your interest rate and save yourself money you should take the opportunity to do so. Even $20 a month can make a difference and you’ll then be able to use that money for something else.

Related posts:

1. Benefits and Requirements of Car Refinancing
2. Is Refinancing A Car Loan A Good Idea?
3. 4 Automobile Refinancing Tips

Now on to the details of finding a cheap car loan:

Do your auto loan research upfront

Like I said, there are plenty of lenders out there that want to finance your next car purchase. It really is a buyer’s market, especially with the current economy and you’re not obligated to finance your car loan with any specific lender, so feel free to refuse an offer if you don’t like it. You really need to get quotes from several auto lenders and then compare them side by side to see which one has the best terms and rates. Look at everything, including the fine print. This may take a little time, but the results are well worth it. And if you go online to search for cheap car loans you can speed up the process substantially.

Attain and keep a good credit rating

A good credit score will make it easy for you to negotiate the best possible interest rate. If your credit rating is currently a bit weak you may want to wait a few months before buying a new car and take that time to strengthen the credit report.

Increasing your credit score does take time, but you can do it. Making sure all of your payments are on time is the first step towards a higher credit score. If you can also pay off some loans or credit cards that will help, but don’t close the accounts after paying them off, especially if they are older accounts. In general you’ll find that the higher your credit score the lower your interest rate and the cheaper your car loan will be.

Have a large car loan down payment or trade-in

It makes sense that the less money you borrow the lower your monthly payments will be and you’ll also pay less in interest over the life of the car loan. Always do your best to get the most possible for your trade-in and even better have cash to put down on the new car purchase. In some cases you may benefit from selling your old car privately rather than trading in and using that cash as a down payment. This will depend on whether or not you can get more money for the car privately, but it’s worth a shot.

Get auto financing before you go to the car dealer

You dealer will offer you financing, usually through the finance arm of the auto company whose car you’re buying. Now, this offer may be fine, but in most cases you can get better rates from a credit union or bank. If you already have auto financing before you go car shopping you’ll be in a much stronger position to negotiate financing and even the price of the car itself. This way you’ll get both a cheap car loan and a cheaper car price.

Overall, getting a cheap car loan isn’t too difficult if you’re willing to put in some legwork of your own. Take the time to shop around for a car loan and get prequalified and next time you go car shopping you’re sure to get both a cheap car loan and a cheaper car price.

Related posts:

1. 5 Ways to Get Cheap Car Loans
2. Getting the Best Car Loan Rate
3. When Car Refinancing Makes Sense