Strategies That Save Money On Auto Loans

By Kelly Florentino

Consumers who have struggled with obtaining the best auto loans often find themselves with high rates and unattractive terms. The end result is that their vehicle purchases cost far more than they otherwise would. To avoid that problem, these consumers should use a series of simple financing techniques.

Consumers who want to obtain a superior loan should expand their search for financing beyond the various local dealerships in their areas. This includes searching for financing on the internet, where many lenders are now offering terms even to those with the worst credit ratings. Many times, these financing options can provide lower interest rates for good credit candidates.

Of course, the only way to find those rates is to comparison shop. Still, many borrowers will want to avoid the credit damage that can occur when multiple lenders make inquiries over several months. This can be avoided by applying for financing with multiple lenders over the course of no more than a week or two.

Another technique involves agreeing to a loan that is repaid in no more than four years. Longer loan repayment terms may lower monthly payments, but they also add extra interest onto the total loan amount. Over the course of an extended loan, that interest ends up making the loan more expensive.

It's wise to think about buying a new vehicle rather than an older one. Surprisingly, many lenders will offer better terms to borrowers who are purchasing new cars and trucks. Often times, these borrowers can receive interest rates that are several interest points lower than those offered for used vehicle purchases.

There is no getting around the importance of sound financing in any quest for a vehicle purchase. Consumers who effectively incorporate these ideas into their strategies can improve their chances of obtaining attractive car loans at reasonable interest rates.

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