9 Auto Loan Tips

Whether you are shopping for a used car or a new car, there are several tips that apply to both auto loan applications. Payments for both auto loans are calculated in the same way, the same factors will make your auto loan payments go up or down, and you need to be prepared before you sign an auto loan application a dealership.

Three things that determine monthly auto loan payments:

1. The loan amount.

2. The auto loan rate.

3. The length of the loan.

If one of these factors changes, your monthly payment will change.

Your auto loan payment will go up if:

1. The loan amount goes up

2. The auto loan rate goes up

3. OR if you go with a shorter loan. (less years to pay it off

Your auto loan payment will go down if:

1. The loan amount goes down

2. The auto loan rate goes down

3. OR if you go with a longer loan. (more years to pay it off)

Easy stuff?? Unfortunately, many car buyers forget these things in the heat of completing an auto loan application. Car buying can be very fun and exciting. It can be easy to forget your own name when you are excited and nervous about a big purchase. Plus, you may be led to believe that the person "doing the paperwork" is just a paper-pusher. This person actually has a chance to make more money off of you than the salesperson does. It’s up to you how much they make off you. If you are unprepared, they will likely receive a fat check when your loan has funded. Don’t be fooled, the loan officer (aka: finance manager) is in the business of selling too.

9 Auto Loan Tips

We’ve outlined our top 9 tips for getting an auto loan and getting the most competitive auto loan rate based on your credit score. Print them out if you need to – you don’t want to forget these tips. They can save you thousands of dollars over the next few years on your auto loan payments.

1. Order your credit report and credit scores.

Know your credit scores and what's on your credit reports. You can do this on the internet in five minutes. You can order all three credit reports and all three credit scores (Experian, Equifax, and Transunion) at once on sites like FreeCreditReport.com and myFICO . Everyone is entitled to a free copy of their credit report each year. However, the free copy does not include your credit scores. Your credit scores are what the Finance Manager uses to determine the interest rate on your auto loan. If you only want to order one credit report, FreeCreditReport.com (an affiliate of Experian) and Equifax Credit Report sell individual report/credit score packages.

NOTE:Keep in mind that the finance manager (the dealerships' loan manager) may pull more than one credit report to determine your auto loan rate. The information reported by each of the three credit agencies (Experian, Equifax, and Transunion) can vary. To avoid being overcharged, order all three credit reports and all three credit scores prior to signing any loan documents. This will give you a chance to correct any inaccuracies on your credit reports that could result in being charged a high auto loan rate.

2. Complete an online auto loan application.

Before you go to the dealership, complete an online auto loan application with another bank. Prepare for Car Loan Scams with an online auto loan application. You can do this online and get the results in just a few minutes. Websites like MyAutoLoan offer easy online auto loan applications with fast response times. By completing an online auto loan application, you give yourself an escape plan in case the dealer offers you a higher auto loan rate.

3. Don't tell the dealer.

Don't tell the dealer that you have another auto loan until you finish negotiating the price of your car, the extended warranty, and trade-in (if applicable). Why? If they know they won't make money on the financing, they will be more conservative on the vehicle price, extended warranty, and trade-in (Check out other options for Selling a Used Car ) Finish negotiating the price of your car, extended warranty, and trade-in (if applicable) before negotiating loans.

4. Negotiate a lower auto loan rate.

Use an online auto loan to negotiate a lower rate with the finance manager. Your back-up loan from MyAutoLoan can be used to get an even better deal out of the Finance Manager. Let them know you will be using another auto loan for the financing. They will ask for your approved auto loan rate and offer up a lower rate if they have it available. If they can't match or beat the rate of your "back up loan", then you haven't risked anything. NOTE: Remember the three things that determine a monthly payment (see above). If the auto loan rate is higher and they say they can "save you money", it's not true. They are increasing the length of the auto loan - which will cost you more money (maybe even $1,000's). Read more at Car Loan Scams

5. Refinance your auto loan.

If you discover that you dealer gave you a high interest rate, refinance your auto loan. Many people don't realize that you can refinance an auto loan. You can refinance your auto loan rate on websites, like MyAutoLoan . If your dealer stuck you with an ugly interest rate, give one of these sites a shot. It can be a real money saver!

6. Cash Rebate vs. Low Auto Loan Rate.

Calculate whether you should accept a cash rebate rather than a Low APR offer. If you have the choice between a Cash Rebate and a Low Auto Loan Rate on a new car, you need to visit our Dealer Loan vs. Cash Rebate page. We give you an easy 3 step calculation to determine which will save you more money over the time you plan to keep the car. The step can save you $1,000's over the time that you drive your new vehicle.

7. “Less than Perfect Credit”

If you have “bad credit”, complete auto loan applications with “less than perfect credit” lenders. The worst thing someone with bad credit can do is to complete multiple auto loan application after auto loan application only to get rejected each time. This will eventually hurt your credit score even more. (Numerous credit inquiries on your credit report are a red flag to lenders.) Instead, complete an online auto loan application with a leader that is tailored for customers with less than perfect credit, such as, MyAutoLoan. These companies offer online auto loans to people with low credit scores. This will save you time and reduce the number of credit inquiries on your credit report.

8. “Good Credit”

If you have “good credit”, don’t assume that the Low APR offer is the best way to go. You may be asking - how can 1.9% financing not be the best option??? If you are offered 1.9% financing OR $5,000 cash rebate, which do you think will save you more money? Guess what? The answer is different for every buyer. Factors such as your down payment, trade-in, and your credit scores will affect which option saves you more money. Visit our Dealer Loan vs. Cash Rebate page for the easy 3-step calculation to determine which saves you more money.

9. Remember All the Salespeople.

Remember: The person handling your car paperwork is also a Salesperson. Many are misled to believe that this "banker" type person is just getting your paperwork and financing in order. This person is actually a salesperson too and they can be very sly at their job! You may feel that once the "car salesperson" is gone, you are safe. Wrong! Dealerships make a lot of money when car buyers visit the Finance Manager's office. Dealerships make money on auto loans and leases, as well as, Extended Warranties , Gap Insurance, and many, many little add-ons that the Finance Manager sells. It's important to negotiate items, such as an Extended Warranty or Gap Insurance before you arrive at the dealership. These items can be purchased from independent companies too and the cost can add up if you don’t compare pricing with other companies first.