How to save money on an auto loan

Last updated: September 10, 2022

Getting an auto loan to purchase or even refinance an existing loan is a common practice today. In our environment today, money is cheap and interest rates are at the lowest levels they’ve ever been. Why would you want to put up a large sum of your hard earned cash when you can use someone else’s money for such a small fee? Life’s short, get your dream car now.

There are ton of options when it comes to getting an auto loan. You can work with the car dealer or arrange it on your own through an auto finance company a bank or even a credit union. The more options you have the better your chance at getting a low rate. Getting that low interest rate can save you hundreds or even thousands of dollars so it’s critical to shop around.

Here are a few strategies to make sure you can save money on an auto loan:

Know your credit score

Picking out that new car first would be fun, but if you know your going to use financing we should probably look at your credit score first. A high credit score means a lower rate and extra dollars in your pocket. Make sure you review your credit report first and see if there are any errors. An error could cost you some serious bucks. Thankfully, the Fair Credit Reporting Act guarantee’s that you can fight to make sure there aren’t any mistakes in your credit report.

Shop around

You spend tons of time trying to find the right car for you, why would you spend any less time shopping for the right auto loan? Dealer arranged financing is what consumers typically use because it’s the easiest, but unfortunately, it’s typically the most expensive route. Utilize the tools on to comparison shop and make sure you get a good deal. There are a lot of factors when it comes to getting a loan, but bottom line is the lowest interest rate is usually your best bet.

Don’t be afraid to refinance

If you already have an existing auto loan and wish you could reduce your payments, refinancing could be the answer. If your credit score has improved or if interest rates have gone down, that’s even better. Getting a lower payment by refinancing is a straightforward and fairly simple process. You could refinance by paying more principal down or by extending the life of the loan. Depending on your rate, either method could reduce your monthly payment.

Once you have found the right loan and completed the paperwork, the process is simple. Your new lender will pay off your old loan and you would start paying them instead.