Tips On Auto-Financing: How You Can Save On Car Loans

It can be exciting to get your very first car, but it can also be challenging, especially if you are planning to get a loan. Depending on your negotiation abilities, you can get a lower interest rate on auto-financing or not. You can even get a $1,000 discount if you make a total of at least $1,500 downpayment.

Some people believe that owning a car is an investment, but the truth is it is not an investment. The reason behind this is because of how crazy the depreciation of cars can go in just a short period. The price of the car can depreciate even while you are still paying our loan.

So it would be best to always take into consideration the terms of your monthly payment, and as well as the total cost of the car and the loan itself.

Here are some tips on auto-financing to help make sure that you’ll be able to save on car loans.

1.Pay With Cash

There will always be miscellaneous expenses that will come with the purchase of your vehicle, including documentation fees, registration fees, and sales tax. These expenses should be paid via cash, instead of including these things in the finance loan.

Usually, dealers will offer to include these expenses to your financing agreement. But the problem is, it will only increase your total loan, but never the car’s value. So always make sure to make it clear with your dealer that you’re going to pay for these extra expenses using cash.

2.Provide A Down Payment

For you to be able to save on loans and ensure that you can apply for a short loan term, you can choose to provide a down payment of up to 20%. Some dealers don’t require their clients to provide a down payment, especially the ones with a good credit score. If you want to shorten the loan term that you’re getting for your car, it would be best to provide a 20% down payment. It can be tempting to not give a down payment, but this means that your loan term will be longer. Not giving a down payment may cause issues when you suddenly have to sell it. If you owe more than the car is actually worth, you may not be able to sell it.

3.Choose A Shorter Term

Choosing a shorter term means you’re going to also have a lower interest rate. But this also means that your monthly payments will be higher. Watch out for dealers who will show you lower monthly payments and longer terms for the loan. This will not help reduce the total cause of the car, but will only increase it due to the interest rate. The longer the term, the higher the interest rate, which will also increase your credit’s cost.

4.Check Your Credit Score

Now, before going to the car dealership, it would be best to check your credit score. It’s now easy to check your credit score because of the number of free tools and apps online. You can get your score for free so you know what to expect when you get to the dealership.

Fortunately, there are now dealerships that are still willing to provide you with an auto loan even if you have a low credit score. But if you have a good credit score, you can expect interest rates to be between 1.9 to 2.9%. There are also some instances where they offer a zero interest rate because of the good credit score that you have.

Of course for people who have a lower credit score, the interest rate may be higher than 2.9%. There may be even 20% interest rates, which is a lot to begin with.

5.Financing Quotes

Now, if you, unfortunately, have a bad credit score, you can start getting financing quotes so you can choose the one that has the best deal and a lower interest rate. It can be daunting to go to different dealerships, but this is better than not doing anything to get that car loan that you need.

You can also try getting a deal with used cars since most used cars are in good condition. These are also the ones who got pulled out due to non-payment. You can try to bargain with cars like this and can request for a pre-arranged financing.

When Should You Refinance An Auto Loan

For people with a good credit score and a car that’s not too old, the possibility of refinancing your car is high. Getting a quote for refinancing is easy and doesn’t really require any obligations at all. You can also check your local credit union because they provide different options when it comes to refinancing your auto loan.


With all of this information on how you can start saving for your car loan, you will surely be able to get that loan. Remember to follow the tips above so you can get the loan amount and the interest rate that you can easily handle.

Photo Sources: Kiabrunswick, Flickr, Noobpreneur, Digital dealer

Based on the materials from Money Under 30