How to Save The Most Money When Getting a Car Loan
The biggest potential savings occurs during the financing of a vehicle. Savings of up to $5,000 is not uncommon.
Since the cost of car financing is hidden or stretched out for as long as 7 years in some cases, people don't realize how a few extra bucks per month can really add up over the long-term.
Most car buyers take care of their financing needs at the dealership - they don't realize they can get financing elsewhere, or they just don't take the time to shop around. This is a very expensive mistake dealers love to see.
When a dealer arranges the financing, they will oftentimes put you into a loan with an interest rate that is much higher than you should be paying. They may tell you that your credit is not good and that you don't qualify for anything better.
On a $25,000 car loan financed for 6 years, a 5% interest hike will end up costing you an extra $4,374.
So what IS the best way to save money on financing?
It's actually very simple - You need to comparison shop for the best financing rates.
Auto financing is a business just like any other business. There are hundreds of lenders competing with each other for the same customers. You will get the best deal when you comparison shop.
Begin by getting financing quotes online. This will oftentimes result in the best financing rates because online lenders don't have huge overhead and can pass the savings on to the consumer.
[INSERT FINANCE WIDGET]
Another financing source we highly recommend is: Auto Credit Express. Fill out their form to get financing rates from a different set of lenders.
Next, you should apply for financing at the top auto lending companies such as Capital One, Chase Auto Finance, Wells Fargo, Bank of America, and US Bank. You never know which one may be offering special discounts and rates until you contact them.
If you bank with a small community bank, it's also worth giving them a call and applying for a loan.
Finally, you should also get quotes from credit unions. You can sometimes get rates that are 1 to 2 percent lower than anywhere else.
After you've comparison shopped your car loan, you should now know the best rates you qualify for.
You can take this information to the dealer as a last step, and see if they can beat your best rate. In some cases, they may be able to offer you even better terms due to their relationships with exclusive lenders.
Remember: Comparison shopping is key to saving the most money when getting a car loan. It's well worth the time and effort to do so.
My Recommendation for Car ShoppersTrueCar No-Haggle, CarsDirect, and Ryde Shopper are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid