5 Ways to Lower the Cost of Getting a Car Loan

9 July 19

Getting a Car Loan

Getting a car loan. This process can be slow and expensive, but there are ways to lower the cost that is paid in the long run. Here are some ways to make the car buying process less expensive.

Do Your Research

Knowing what kind of car you want to buy before making a purchase is always a good plan. You should have a good idea of the make and model you want before heading out to a dealership whenever possible. This will allow you to look at the websites of all of your local dealerships and see who is going to be able to give you the best price before starting the buying process. There can be a significant difference in prices, so this can help you cut down on how much you would spend before ever heading out the door, meaning you would need a lower total loan to buy the car.

Consider Loan Length

Loan length can have a lot to do with how much you end up paying for your spotloan. If you have a loan that has to be paid off within 1-2 years, the amount you pay each month hits your principle harder than loans that are extended out to 5-10 years. If you take out $10,000, for example, and pay it off in two years, you will end up paying very little in interest comparatively to the same loan extended out for ten years. With an extended loan the monthly payments may be lower, but you will end up paying more in the end. If you want to lower the cost of what you pay in total for your car, you should seriously consider taking the shortest-term loan you could afford each month.

Improve Your Credit

When you are given the opportunity to have some time before buying a new car, bettering your credit is one of the best things you can do to lower the cost of your car purchase. The better your credit score is, the lower the interest you will be required to pay back. Paying off other debts and paying each of your bills on time every month can help improve your credit score over time, and this will lower the total amount you will have to pay for the car when all is said and done.

Consider New and Used Before Buying

Many people think about buying a used car when wanting to save money on a car purchase, but that is not always the most cost effective route to go. Consider the fact that many new cars are coming straight from the dealers with lower prices than some used cars on many car lots. Plus, keep in mind the fact that you will possibly have some type of repairs over the next few years with a used car. When buying a new car, your warranty will likely cover most of the repairs for the next 3-10 years, depending on the type of warranty you purchase. For a used car, there is typically a much shorter warranty, which means the rest of those repairs over the same time will come out of your pocket. Plus, new car loans are often easier to get over used car loans.

Find the Right Location to Buy From

Buying a used car from one county may be more or less expensive than a neighboring county due to that county’s sales tax. If you look around and see what the sales tax is in neighboring counties before buying, you may find one where you can save a little bit of money during the process. This can also be the case if you are near to another state line. This can help lower the cost of your purchase, and lower the amount of the loan you would be required to take out.

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