How to Get a Lower Car Loan APR
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Get a low APR on a car loan by improving your credit and shopping across multiple lenders for the best deal.
The APR (Annual Percentage Rate) that you pay on a car loan is calculated annually based on how much you owe in interest and extra fees. A lower APR will lower your payments and reduce the total amount you ultimately pay for your car.
Thankfully, you can get a lower APR by shopping around, raising your credit score, and doing a bit of negotiating. Read Jerry‘s guide below on getting the lowest APR on your loan.
Check your current credit score
Your credit score is one of the biggest factors toward your APR rate. You’ll want to make sure you have a good, accurate credit score.
Order your current credit report. You can get a free credit report annually from sites like TransUnion and Equifax, but you will probably have to pay to get your credit score. Some credit card companies provide your credit score monthly on your statement, free of charge.
Improve your credit. Pay off some of your debt. This is one of the best ways to get your credit score up and get a lower APR.
Check your credit report for accuracy. It doesn’t happen all that often, but sometimes, one person’s debt gets put on another person’s credit report by mistake. You may be able to raise your credit score by simply correcting an error.
Ideally, you want a credit score of 700 or above. A score of 629 is okay; however, if your credit score is below 540, it will be nearly impossible to get a low APR on a car loan.
Find a car you’re interested in
Lenders will probably want to know if you’re getting a new or used car loan. Try to find a car that you want to get a loan for, or at least have a general idea so you can better communicate with lenders.
Take a look at new cars. Even if you think there’s no way you could afford a brand new car, you might be pleasantly surprised. You can generally get a lower APR on a new car loan, which could lower the price to within your price range.
Take a look at used cars, too. You can often get a very good APR on a loan for a low-mileage used car that is in good shape.
Don’t buy yet! If a dealer insists he or she can get you a good APR and you have the time to listen, go ahead see what he or she has to offer, but try not to jump into a deal too hastily.
Find a good APR by searching for lenders
Check with your current bank. A bank where you already have an account in good standing may offer you the best APR.
Contact other banks in your area. You may get a better deal at a different local bank, especially if you agree to open an account there.
Keep in mind that a bigger down payment may get you a lower APR on a car loan.
Check the APRs being offered by online lenders and banks. There are some very good deals to be had online, and they don’t mess around. Search for lenders that can compare rates and let you apply for loans online, or call lenders for deals.
You can also contact your bank to see if they’ll pre-approve you for a car loan.
Generally, you can expect to be pre-approved quickly, usually within hours.
Get a car loan that has a shorter duration of 24 or 36 months rather than 48. The shorter the duration, the lower the APR.
MORE: How to refinance a car
Refinance with Jerry
After you get the best APR you can find, you can go ahead and buy your car with your new loan.
Be sure to make your payments on time every month. Include an extra principal payment when you can to get the loan balance paid down faster. During the first few years, most of your payment is applied toward the interest on the loan.
Regardless of whether or not you have a good APR already, it’s worth it to try to refinance your loan after a year or two. By then, your credit rate should be up and the principal on your car loan should be at least slightly lower.
You can make the refinancing process a lot easier with Jerry.
For car owners looking to save money on their auto loan, the Jerry app is a must-have resource for refinancing and finding a loan that matches their profile.
Don’t lose money with a bad interest rate. Refinance your auto loan and reduce the interest on your loan. Have all of the resources needed to refinance your auto loan in one place. Jerry is an app that connects you with top lenders in minutes, and even notifies you when you have a new loan opportunity.
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