How to Lower Your Car Loan Interest Rate

If your credit is bad you may have been forced to settle for a car loan with a high rate of interest. There are ways to get that rate lowered provided you qualify for a lower rate of interest. A lower interest rate means more of your payments go toward the principal balance, helping you pay off your car loan faster. You also pay less in finance charges during the term of your loan.

Instructions

1

Check with several lenders to see which has the most favorable terms. To get a lower interest rate, you will need to refinance your existing balance. Investigate whether you will be charged an application fee or any other fees. Determine how long the process will take and if the lender requires a down payment. Make sure your existing loan is paid on time; late payments could disqualify you.

2

Once you have found a potential lender, submit a credit application. The information will include name, address, date of birth, place of employment, Social Security number and personal references. Any missing information will delay processing time. The lender will examine your credit report.

3

Understand the new terms. A longer term can potentially decrease your monthly payment; a shorter term can increase it. If your application is approved, sign all loan papers and get copies of the loan agreement. The lender will send you a payment coupon book in the mail.