The Simple Truth on How to Get the Lowest Interest Rate on a Car Loan

by Hank Coleman

I refinanced my car loan and love it!The interest rate you get on your car loan can have a significant impact on the amount you will pay over the life of your car. Even a change of 0ne percentage point can bring down your overall costs by thousands of dollars, depending on the terms of your loan and the price of the car. How do you get the lowest interest rate on a car loan?

It is important that you do everything you can to bring down the interest rate on your car loan so that you can save money over the life of the loan. Here are a few tips for how to get the lowest interest rate on a car loan:

How to Get the Lowest Interest Rate on a Car Loan

Clean Up Your Credit

Your interest rate is determined in large part by the credit score you have. The higher your credit score, the lower your interest rate will be. You can help to increase your credit score and make yourself attractive to lenders by lowering your overall debt-to-income ratio, paying all your bills on time, and keeping the amount of inquiries on your report low.

Make a Down Payment

By lowering the amount of the loan you take out, you can get a lower interest rate. You can lower your loan amount by making a down payment on your car. Not only will you lower the loan amount but you’ll also show lenders that you are financially responsible by saving the money for the down payment. Both will help you to get more favorable loan terms. For assistance, use an auto loan payment calculator to determine how much you should plan on putting down.

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Get Bank Financing

Financing through a car dealership will almost always result in less favorable loan terms. When you get financing through a bank – especially one in which you have a relationship – you are likely to get a lower interest rate and better overall terms. If you have access to a credit union, you’ll get even better terms.

Refinance Later

Sometimes you just can’t wait to get your new car until you qualify for the best loan terms. Sometimes you just have to take what you can get and hope for the best. However, even if you don’t get the best loan terms when you buy your car, you can still save money by refinancing the loan later. Work on improving your credit score and apply for refinancing a year or two after you get the loan. You may be able to drop a couple of percentage points on your interest, helping you to save a lot of money.

The interest rate on your car loan plays a big role in your monthly payment and the amount that you end up spending on the car. Don’t pay more than you need to pay. Work on improving your credit score, saving for a down payment and looking at bank financing to help you get the lowest interest rate possible and to save you money. You’ll lower your monthly car payment and save yourself a lot of money over the life of the loan.

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]

Hank Coleman has written 582 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.

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{ 2 comments… read them below or add one }

Mark Ross

Those are great tips you shared there. I will be taking note of those when I get my very own car loan soon. Thanks man!


Christine @ ThePursuitofGreen

Good tips! If only this was written a few months earlier from now! Haha. All good though. My credit score is really good and combined with the deals car dealerships are giving out because of the low economy I scored 0% financing! The only question now is if its worth it to pay off early or not? It’s probably the only 0% loan I’ll ever get in my life! Other than family loans.


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