You’ve narrowed down your search for the perfect used car for your needs and budget and are ready to address your finance options. If you won’t be buying the car outright, you’ll need to finance it, which means paying interest. To avoid paying more than necessary for used cars, you’ll want to keep your interest rate as low as possible, which you can easily do with a few good tips.
Think About Financing Through the Dealer
While you might think financing your car through a dealer is automatically more expensive, the truth of the matter is that doing so could net you a pretty solid deal. This is because dealerships can offer incentives like zero-percent financing and other specialized low rates. Check to see what’s on the table before you think about financing elsewhere.
Consider a Certified Pre-Owned Car
It seems counterintuitive, but older cars usually come with higher interest rates when compared to newer models. Instead of thinking you’re better off with a new model, consider the fact that dealerships sometimes have zero-percent interest specials on their certified pre-owned cars. Be sure to ask about them as you’re walking up and down the aisles checking out cars.
Consider Your Term Length
If it’s at all possible, get a car loan with the shortest term length possible. The reason for this is that a shorter term length equals a shorter repayment length, which means a lower amount of interest paid over the life of your loan. Another great thing about getting a term length as short as possible is that you don’t have to worry as much about being upside down on your loan, which is what happens when you owe more on your car than it’s worth.
As you can see, there are several things you can do to keep the interest rate low on your used car. Be sure to put these tips to good use.