• Auto
  • Here’s How To Get A Cheap Car Loan

Here’s How To Get A Cheap Car Loan

Understand Your Budget

The first step to understanding your loan budget is getting the car’s retail value. Then look for estimated sales tax, interest rates, and your auto loan term. Figure out the size of your down payment because a bigger down payment means a more affordable loan. Finally, find out the trade-in value of your current car. You won’t get exact numbers online, but you’ll get a pretty good idea. The DMV also has a handy calculator to help you crunch these numbers.

Loan Alternatives

You don’t need to rely on the dealership for an auto loan. Start your car buying process by shopping around with banks and credit unions. These generally offer better rates than dealers. Check what they can offer you and also check online lenders for affordable rates.

Down Payment

Large down payments are a great idea. If you put down a big down payment, you’ll have to borrow less. This means that you are likely to get a good interest rate for the loan and keep the term of the loan short. When you consider the trade-in value of your car along with the down payment, you can lower the amount you borrow.

Explore Your Options

Speak to several dealerships, banks, and credit unions and consider the pros and cons of each loan offer.  It may take some time to figure an affordable option, but you’ll be happy about it in the long run.

Red Flags

There are, however, certain things you need to be careful about while shopping for affordable car loans. Super low monthly payments seem affordable, but the longer term they come with means you’ll be paying thousands more in interest. Extremely long-term auto loans are also a no-no. This is because the longer the term of the loan, the more money you will shell out. Avoid prepayment penalties at all costs. Zero percent financing isn’t available for most people. And even if you get it, you’ll end up spending more money on the cost of the vehicle. And this totally undermines the benefits of a cheap car loan. Remember to be careful. Don’t get caught in a loan agreement that hurts you.