Dec 11, 2017

When we think about buying a car, most of us focus more, or entirely, on the final price of the car. We want to save the most on the price to minimize the hit on our wallet. However, what we also need to think about is the automobile finance we will acquire. If maximum savings is your ultimate goal, securing the perfect car loan deal is the best way to achieve it.

Here are a few ways you can save the most money by getting the best deal on a car loan.

Start with your credit report

The kind of car loan deal you’ll be able to secure will depend on the state of your credit report. Your credit report records all of your previous borrowing activity that can let the lenders know how trustworthy and fiscally responsible you are. And you can apply for a copy of the report by all the major reporting agencies including Equifax, Experian, and TransUnion.

When you have your credit report in your hand, you can get an estimate of the kind of deal you can secure. You can also check your credit report to fix any potential mistakes in it beforehand.

Shop around for the best deal

Once you have your credit report and you know your credit score, you can set out to search for the best car loan deal. Think about shopping for car loans as being similar to shopping for the car. You need to check out different lenders to know who is willing to offer you the best terms on a car loan. Some of the best places to shop for a car loan include banks, credit unions, credible online lenders, your car dealership, and even your car insurance company. Once you begin the search, the most important factor you need to consider while comparing deals is the interest rate. The difference of even a single percent can have a huge impact on the total cost of your car loan. 

Consider the cost of the loan

The total cost of the car loan is as important as, if not more so, than the price of the vehicle. This is the amount you’ll ultimately end up paying, given that you don’t skip any payments.

And one of the biggest factors that influence the total cost of the loan is the Annual Percentage Rate (APR). You have to focus on securing the lowest APR you can possibly get, in order to minimize your overall cost. You can also significantly cut down on the cost by making a large down payment. That way, you can save a lot more on interest than you could have otherwise.

The duration of the loan

If you want to secure the best deal on car loans, you need to apply for the shortest loan duration you can afford. While you might think that longer loans will be much easier on your wallet, the total cost of the longer loan will also be much higher. And, as we’ve already discussed, the cost is what you need to cut down.

The ideal duration for a loan, where you can receive lower interest rates, is three to four years. Yes, you might need to pay more on a monthly basis but you can get out of the loan much quicker as well. Wouldn’t that be worth all the trouble?

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