Clear Talk About Car Loans

5 Ways to Save Money on Your Next Car Loan

Finding ways to save money on your car loan can give you more cash for a better car, lower monthly payments, and easier credit in the future.

Here are 5 easy ways you can save on your next car loan:

Don't Get Your Financing through the Dealer

Bad credit, good credit, no credit—it doesn't matter. You will be much better off obtaining your car loan through an actual lender rather than a car dealer. Dealership financing often comes with higher interest rates, which means a bigger payment every month, and more money spent over the life of your loan.

Ask for a Short Term

A shorter term will make your monthly auto payments higher, but it will also allow you to reduce the amount of interest you have to pay. The longer your loan term is, the more expensive the vehicle will inevitably be after all is said and done. Always get the shortest term that you can afford; you will be surprised at how much money you can save on an auto loan.

Put Money Down

If you have any money saved up, you should make a down payment on the auto loan. The less money you borrow, the less you will have to pay in interest. The amount of money you can save will depend on how much you are borrowing, the price of the vehicle, and the interest rate being charge, but it would not be unreasonable to expect to save hundreds or even thousands of dollars over the term of your loan.

Avoid Prepayment Penalties

Some auto loans have prepayment penalties, and some don't. Finding an auto loan without a penalty is beneficial in case you ever decide to refinance. Refinancing an auto loan can get you a better interest rate, and is usually free—providing you have an auto loan without a prepayment penalty.

Look for the Best Loan

Buying a new car can be exciting. Looking for the best loan is not. It can seem tedious contacting several different lenders after the first one has agreed to approve you for a loan. But if you want to save money on your next auto loan, you must actively look for the best loan around.