Here are six ways to make sure you save money on your auto financing and get the best deal on your auto loan.
- Line up financing before you visit the dealership -- if you walk into a dealership without several loan offers, you're at a disadvantage. Get pre-approved for financing in advance, so you know how much you can spend and what your interest rate will be before you buy.
- Don't focus on the monthly payment -- you do have to balance the monthly payment amount with the financing terms, but focusing solely on the monthly payment amount is a sure way to get a bad deal on your financing -- and your car.
- Get auto loan quotes from multiple lenders -- LendingTree allows you to fill out one short form and get up to five quotes from auto lenders. This is a great way to compare quotes from competing lenders -- and the more quotes you get, the better your chances of getting a great rate.
- Compare loans based on the APR -- Don't compare just your interest rate. It's useful for calculating your monthly payment, but the APR includes all the financing charges and is a truer measure of the cost of your loan. The lower APR is the better deal.
- Set a short term for your loan -- longer terms mean paying more interest, increasing the cost of the car and upping your chances of being upside down. Shorter terms build equity faster, and interest rates are lower for shorter term loans.
- Make a significant down payment -- A larger down payment may help you get better financing terms, but it also means you won't be upside down in your vehicle.
Check local banks and credit unions
Larger banks are usually conservative with their auto loans. For example, Capital One requires the car to be less than seven years old and under 70,000 miles. Chase requires the vehicle to be no more than 5 years older than the current model year and under 75,000 miles. But small, local banks or credit unions are often in a position to provide you with financing on automobiles these banks will not. In order to get a loan with a credit union, you must first be a member. But often it's easy to join.