So, you are ready to buy a car. As you start shopping, you realize there’s more to think about than just the make or model. You’ll also have to figure out the best auto loan for you. Below are four tips to help you lower the cost and save money on your next auto loan:
1. Give your credit score a boost.
One factor in determining your interest rate is your credit score. The higher your credit score, the lower the interest rate of your loan. Even a small boost in your credit score can save you hundreds in interest payments over time. Your payment history and the amount you owe on current loans and credit cards make up approximately 65% of your credit score. By bringing your accounts current, if you’ve missed or have been late with payments, and by limiting how often you use your credit cards, your score could be positively affected. In fact, your credit score is so important and vital to good financial wellbeing that we created a comprehensive guide on it.
2. Refinance your existing auto loan.
People refinance their mortgage to reduce their interest rate (and payments), but many people don’t realize they can also save money if they refinance their auto loan at a lower interest rate. Not only could it lower your payment, but it could reduce the total amount of interest you are paying. For example, when you refinance an existing auto loan with Arbor Financial, you could save hundreds, even thousands, compared to higher interest competitors. Below are two real-world examples where Arbor Financial was able to help members save money with lower interest rates:
|Auto Loan Amount: $17,717.00|
|Competitor 1||Arbor Financial Credit Union|
|5.76% APR||3.74% APR|
|Current Payment: $431||New Payment: $398|
|Interest savings: $743|
|Auto Loan Amount: $24,550.00|
|Competitor 2||Arbor Financial Credit Union|
|8% APR||4.49% APR|
|Current Payment: $484||New Payment: $440|
|Interest savings: $2,587|
3. Find the lowest auto loan rate.
It pays to shop because Arbor Financial offers some of the lowest auto loan rates in Michigan. And, if you are buying a car from a dealership, don’t always accept the rate they give you. Typically, a dealership is just the middle man between the lender and you, which means you may pay more in interest than if you got financed directly from a lending institution. Additionally, at Arbor Financial, we like to help our members get preapproved before they even go car shopping. This puts you in a better negotiating position because you’re like a “cash buyer” and can talk bottom line pricing instead of financing, which ultimately will help you stay within a realistic budget.
4. Look for special offers.
Lending institutions want your business and some may have promotions that can save you money! At Arbor Financial, we are currently running a 90-day no pay special through the end of 2019. By delaying your auto loan payment for three months, this will free up cash flow which can be helpful around the holiday spending months.
The Bottom Line
There is more than one way to save money on your car loan. Curious how much you could save by financing or refinancing your auto loan with Arbor Financial? It takes less than 10 minutes to find out! To get started, call 269.488.5945 (KWIK) or apply online.