Smart Tips for Lowering Your Car Loan’s APR

Check credit reports: A smart thing to do is start by reviewing your credit history. You can ask for a free credit report once a year. Also, check it for errors and inaccuracies that may be hurting your credit score. Get any mistakes corrected because a better credit score means lower APRs.

Refinancing: If you already have a car loan, refinancing it is a good way of lowering your APR. Apply with a new lender to pay off your existing loan and replace it with a new one with better terms like a reduced APR, shorter loan term, etc. If you qualify for refinancing to a loan with an APR that’s even one percentage point below your current rate, you’ll be saving a lot.

Co-borrower or co-signer: If your credit isn’t all that great, but you can get a co-borrower with solid credit history on the loan, then you could get good terms. Co-borrowers sign a joint auto loan contract and have equal rights to the car and equal responsibility towards the loan. Or you could get a co-signer who takes up responsibility for the loan but has no rights to the vehicle.

Options: Before you sign on a loan, check with banks, online lenders, and credit unions for loan rates and terms. Compare them and see who is offering you the best rates.

Short terms: A longer loan term means that you will pay more interest. So keeping your loan term short may be a way to reduce your APR. It also means that your monthly payments will be higher, but it’s the right way to go if you can afford it. A short loan term means that you will pay less interest, you will pay less overall for the car, and get debt-free sooner.

Negotiate: Brush up on your negotiation skills and because you can actually bring down your APR and interest rate if you do it right. Arm yourself with multiple quotes, your credit details, and don’t be afraid to ask for lower rates.