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How can I reduce the interest rate on my car loan?
I want to get a lower interest rate on my car loan. How do I go about it?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
If you already signed the paperwork for the
car loan
, the only way to get a lower interest rate is to refinance your loan. Car loans are binding documents that usually don’t have any language regarding interest loan changes, and few if any of these contracts have an addendum that allows for a change in the interest rate.But before you refinance the car, you have to make certain that your car loan doesn’t have prepayment penalties. These penalties are usually 2% to 4% of the outstanding balance on the car loan and are used by lenders to deter refinancing so they can maximize their profits on the car loan.
If your loan has a
prepayment penalty
, you will have to compare the savings on the interest rate to the prepayment penalty to come to the right decision.If you want to save money in the meantime, take a look at your car insurance policy; there might be ways to save. Try using the number-one-rated car insurance app,
Jerry
. Jerry compares personalized rates from more than 50 top providers and delivers the best deals to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!View full answer
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