How to Negotiate Low Car Interest Rates

Auto lenders charge interest on car loans in order to earn money on the loan. Unless you finance an automobile during a 0 percent interest promotion, you can expect to pay interest on a vehicle loan. Borrowers with low interest rates will have a lower monthly payment, and those given a high rate pay higher monthly payments. Savvy buyers are interested in ways to obtain the lowest rate possible.

Instructions

1

Skip the 60-month term. Agree to finance your automobile for less than the traditional five-year term to get a lower rate on the loan. Borrowers who choose shorter terms such as 36 or 48 months receive cheaper rates.

2

Wait until you're a prime applicant. Auto lenders classify prime applicants as those with a good credit score. According to Experian.com, good credit includes a score of 700 or higher. Pay bills on time and keep your debts low to improve your credit rating and get the lowest rate.

3

Use your own bank or credit union. Auto dealers work with specific banks when financing car buyers. You can use their banks to finance the purchase, or do your own shopping and compare rates with more than one bank. During some promotions, the dealer will offer extremely low interest rates, and if you qualify, that might be your best option. However, the ultra-low rates typically are available only to buyers with very high credit scores.

4

Bring down the interest rate with a down payment. According to Cars Direct, higher down payments help reduce the interest rate. Aim for a down payment of at least 20 percent. If paying $15,000 for a car, save at least $3,000 for a down payment.