Financing a vehicle is very common. Most people do not pay cash up front for a car and, therefore, rely on car financing. While financing a vehicle ultimately costs more than the original purchase price of the car, there are several ways to decrease the cost of financing and save you money. Here are a few of those tips.
Shop Around for the Lowest Interest Rate
Not every dealership and bank offer the same car loan rates. Some may be able to offer you more competitive rates and terms than others. Before you choose and buy a car, shop around for the best rates available to you. This could end up saving you thousands of dollars over the course of the loan.
Keep Loan Terms Short
It may be tempting to lower your monthly payment by stretching out the duration of your car loan, but doing so also increases the amount of interest you end up paying. A shorter loan length means less interest and a lower cost of car financing. Again, this could save you thousands.
Increase Your Down Payment
Another way to make financing cost less is to increase the down payment on your car. These days, many people get by without paying anything down. Dealerships offer special promotions and deals that offer no money down, and buyers find this attractive. At the same time, those buyers end up paying a larger amount of interest compared to buyers who put down a respectable amount. Some experts recommend putting at least 20% down for a vehicle.
Choose a Cheaper Car
At the end of the day, one of the biggest factors of your car loan will be the car you choose (along with its price tag). The cheaper the car is, the cheaper the financing will be. If you want financing that is more economical, then you might have to choose a car that costs less money.
Ultimately, the car loan that you sign is one that you will be paying off for the life of the loan. Take special care to make a wise car financing choice for you and your wallet.