Pay attention to the dollar amount
Once you’ve settled on a car, pay attention to the dollar amount, not the monthly payment or even the APR. Why? Because even a small increase in the monthly payment means a large increase in the total amount you pay. Auto loan calculators can help you figure things out.
Focus on the car price. It’s worth repeating, because car dealers love it when a customer only looks at the monthly payment. They know they can probably talk you into increasing your payment — what’s an extra $10 a month? A lot when you’ve agreed to a 72-month auto loan, at least $1,000 more in total. So focus on the car price, not the car payment, and negotiate the price down.
Focus on trade-in price, not the monthly payment. Same goes for the conversation about your trade-in vehicle. Car dealers love to say they will “give you” a certain amount for your trade-in. They are not giving you anything; they are buying your trade-in from you and you shouldn’t accept less money for it than it is worth. Again, pay attention to this value and don’t simply accept what the dealer says they will “give you” or forget that the value of your trade is a vital part of the car deal and your money. Research your car’s value ahead of time using tools like Kelley Blue Book, NADAguides or Edmunds.
Low or zero APRs versus cash rebates. A lot of people take pride in receiving a low APR offer. But a 1% APR difference on a $30,000 car is $300, and many rebates are at least $500. If you have to choose between a rebate and a low APR financing deal, the rebate is almost always better.
Watch out for long loan terms. Paying attention to how much in interest you will pay over the years of the loan as a dollar amount instead of a percentage will help you compare apples to apples when you’re looking at different auto loans with different APRs and different lengths. This can ultimately help save you money.