A Few Steps Can Save You Money

When many people think of getting the best price on a car, they think about haggling with the dealer over the price. While negotiating the purchase price of your car is an important part of the car-buying equation, if you want to save as much money as you can on your next car purchase, you also should think about the interest rate on your car loan. Getting the right loan can save you a lot of money over the life of your car. Even before shopping around for your car loan, there are steps that you can take to get the best interest rate possible.

Check Your Credit

When you begin to think about purchasing a new car, check your credit. Your credit score will make a big difference in the interest rate that you are able to get on your car loan. If there are any errors on your credit report, write to the credit reporting agency disputing the error. They will have 30 days to correct the report, or send information back to you with the reason why they were unable to make the change that you requested. Visit the Federal Trade Commission's web site for more information on writing a credit report dispute.

After you have checked your credit report for errors, you may want to clean up any dings on your credit. If you have unpaid utility or medical bills, now might be the time to pay them. Pay any other delinquent accounts as well. From now on, be especially careful about paying your bills on time. Late payments, especially recent late payments, have a large affect on your credit score. When you shop for your car loan, hopefully there will be no recent late payments on your credit report to bring your score down.

Down Payment or Not?

While many automobile lenders will offer you a loan without a down payment, it's always a good idea to have a down payment when you go to buy your car. A larger down payment could get you a better interest rate on your car loan. It also will give you a lower monthly payment, which might allow you to pay for the car for a shorter period of time, saving you even more money. The suggested down payment on a car loan is 20 percent. Although many car buyers pay less, it often costs them more in the long run.

Compare Quotes

After you have spruced up your credit, it's time to compare quotes. Alabama Car Loans can work with different lenders on your behalf to get you quotes from your loan. Not all loans are the same. A low monthly payment spread over a long period of time might look enticing, but in the long run, you will end up paying more than a higher monthly payment over a shorter period of time with a lower interest rate. Some lenders might offer a lower interest rate, but ask that you put down a larger down payment. The choice is up to you.