10 Ways to Save Money on Your Next Auto Loan
Save Money On Your Next Car Loan - Just like any major financing decision, you have to do your homework when looking for an auto loan. There are things that you can do to save you money in the long and the short term. By keeping these 10 ways to save money on your auto loan in mind, you are sure to save hundreds and maybe even thousands of dollars a year.
#1 Arrange Financing Ahead of Time
Before you head out car shopping you should arrange financing ahead of time. You should compare at least 3 sources to get an idea of the average financing rates and terms. When you find a financing option that meets your needs then get pre-qualified. Many auto lenders will pre-qualify you for a certain amount, which will help you to determine the amount of money that you can spend on a car.
#2 Clubs/Memberships
Many organizations and clubs offer discounts on auto financing. Sit down and make a list of all of the organizations that you belong to and find out what type of discounts they offer on auto financing. Some of these options can save you thousands of dollars a year, so it is important that you research what your discounts may be.
#3 Credit Union
Credit unions tend to offer lower auto financing rates than banks and many dealerships do. When you are conducting research, you should definitely look into a credit union that you already belong to or check into the advantages of becoming a member of a local credit union.
#4 Shop Around
Just like any major purchase or finance decisions, you should shop around for auto financing. Obtain as many quotes and estimates as possible so that you have a full understanding of what is going on in the auto financing market.
#5 Compare Dealer to Outside Sources
Go to the dealership with your pre-qualification or comparison shopping information in your hand. Find out what kind of financing options the dealership offers. With the research you have already done you will know if the dealership is offering a better deal or if it is better for you to obtain financing from an outside source.
#6 Beef Up Your Credit Score
Always check your credit score before making any major purchase. The better your credit score is the better auto financing rates and terms you can receive. If your credit score is low take some time to increase your credit score before obtaining auto financing.
#7 Use Your Home Equity Line
Using a home equity line of credit to purchase a car can be very cost effective because the interest that you pay on a home equity line is usually fully tax deductible. By purchasing your car with your home equity line, you will be saving money because you can write-off the interest that you would not normally be able to write-off for an auto loan.
#8 Put More Money Down
The less money you have to finance the lower the interest rate and monthly payment you will have on your auto loan. Putting a little more money down will help you to save money in the long-run.
#9 Buy a Cheaper Car
While the dealer wants to sell you the most expensive car they can, you need to stay focused on what you really need and what you can really afford in a car. You can save money on your auto loan by buying only what you need or by buying a less expensive car in order to stay in line with your financial goals.
#10 Trade In a Car
If you have a car that you can trade in this will also help you to save money on the purchase of a car. This is similar to putting a down payment on your car, which will make your auto loan less, and ultimately make your monthly payments lower.