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4 min read published September 20 in 2022.

Writen by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of taking out loans to purchase a car.

The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances with precise, well-researched and well-sourced facts that break down complex subjects into digestible pieces.

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They ensure that what we write is objective, accurate and reliable. The loans reporters and editors concentrate on the areas that consumers are concerned about most — the various kinds of loans available, the best rates, the most reliable lenders, the best ways to pay off debt , and more . This means you’ll be able to feel secure when making your investment.

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Bankrate has a strict policy standard of conduct, which means you can be confident that we’re putting your interests first. Our award-winning editors and journalists provide honest and trustworthy content that will aid you in making the best financial choices. The key principles We value your trust. Our aim is to provide our readers with truthful and impartial information, and we have standards for editorial content in place to ensure that happens. Our editors and reporters rigorously check the accuracy of editorial content to ensure the information you’re reading is true. We maintain a firewall between advertisers as well as our editorial staff. The editorial team of Editorial Independence Bankrate does not receive direct compensation by our advertising partners. Editorial Independence Bankrate’s editorial team writes on behalf of YOU the reader. Our goal is to give you the best advice that will aid you in making informed personal finance decisions. We follow rigorous guidelines that ensure our content isn’t in any way influenced by advertising. Our editorial team is not paid directly from advertisers, and our content is thoroughly checked for accuracy to ensure its truthfulness. If you’re reading an article or review, you’ll be able to trust that you’re getting credible and reliable information.

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There are money-related questions. Bankrate has the answers. Our experts have been helping you manage your finances for more than four years. We are constantly striving to provide consumers with the expert guidance and the tools necessary to make it through life’s financial journey. Bankrate follows a strict policy, so you can trust that our content is truthful and reliable. Our award-winning editors, reporters and editors produce honest and reliable content to help you make the right financial choices. Our content produced by our editorial team is factual, accurate, and not influenced by our advertisers. We’re honest about how we are able to bring quality content, competitive rates and useful tools for you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and, services, or when you click on specific links on our site. So, this compensation can affect the way, location and in what order items are listed and categories, unless it is prohibited by law. We also offer mortgage or home equity products, as well as other products for home loans. Other elements, such as our own website rules and whether the product is offered in your region or within your self-selected credit score range may also influence the manner in which products appear on this site. While we strive to provide the most diverse selection of products, Bankrate does not include specific information on every credit or financial product or service.

Credit score, vehicle you buy and the credit score of your lender all play an important role in the price of your auto loan. Finding the most suitable place to get a loan from will require multiple applications and more study prior to buying. But getting preapproved gives you more leverage when it comes to negotiations when you visit the dealer — and could allow you to obtain a lower-cost car loan that saves you hundreds of dollars over the loan time. 5 steps to getting a low-cost car loan Prepare to look around for a loan by knowing your budget and credit score, as well as the ideal loan term. These steps will guide you toward an affordable — and perhaps even affordable — lender. 1. Know your budget Experts recommend that you limit your spending to 20% of your total annual income to auto loan expenses, including each month’s loan payment, the cost of fuel, and other related costs. (The recommended maximum for new and used car installments of 15 and 10 in both cases.) Ideally, you should visit an auto showroom with a clear concept of what you want, and include the additional . Keep your spending in check while finding a car that meets your requirements. Use sites like Edmunds or Kelley Blue Book for car price and reliability estimates. The interest rates for new cars are usually less than on but used vehicles typically cost less overall. 2. Check your credit report Lenders weigh your credit score when they evaluate your capacity to repay the loan. The higher your credit score will lower your interest rate. If you’re trying to get the highest rate the lender offers, an excellent score is typically required. You can obtain your score as well as credit history by contacting Equifax, Experian and TransUnion or at no cost at . Try and get your credit rating in the most favorable condition possible before making an application for an auto loan. There are several ways to do this, including filing disputes with credit bureaus. If you find any errors on your credit report, you should file complaints with the correct credit reporting agency as soon as you can. Negative information on your credit report that’s inaccurately reported can drag your credit score. Getting current on all outstanding debt balances. Payment history accounts for the 35 per cent of your score on credit therefore it is essential to bring past due accounts current and to make timely payments on all your outstanding debt moving forward. Reducing your unpaid debt balances. You should aim to bring your credit utilization ratio of 30 percent or less, to increase your score on credit. It is also possible to reduce your credit utilization rate. Avoiding new credit applications. Do not apply for other types of loans and credit cards. A string of hard inquiries within an unspecified time period can hurt your credit score. 3. Prequalify with multiple lenders Although most lenders use the same criteria to determine the interest rate they will use, they apply these factors differently. The most effective way to get the cheapest deal depending on your credit score is to apply to several lenders. Find out information from a handful of lenders like credit unions, banks, or online lenders and then compare their interest rates. Shopping around will give you an understanding of the options out there. And once you have an idea of what you qualify for, you’ll be able to get an understanding of your monthly payment will be. If you wish to, you could discuss an emergency plan already in place. 4. You can apply for loans within a 14-day period Each credit application you submit is an investigation into your credit which can lower your credit score by a couple of points and is on your credit file for upto two years. Hard inquiries also impact the credit rating for up to twelve months, making many applications in a short period problematic for your credit rating. Luckily, an exception to the rule applies for auto loans. The loan applications that are submitted within a 14-day window count as a single inquiry, minimizing the dip in your score. Be aware that any applications made after this timeframe could cause more of a decline on your score, and cause you to be ineligible for best rates. 5. Take the time to calculate While a low annual percentage rate (APR) is attractive however it’s not the only figure to be concerned about. The trade-in value of your old car, and yours will be will be a factor in your total price of your new car. The more you can pay upfront — and the lower interest you’ll pay in the long run- the cheaper you automobile loan can be. Use an to help determine the total amount of interest you’ll be paying and the monthly amount you will pay. It is a useful tool, particularly when you prequalify with multiple lenders and know what rates you can expect. Most car loans are available in lengths of between 24 and . Although a longer duration means a lower monthly payment however, it is more expensive overall because of the cost of interest. Select the loan with the shortest term you can reasonably be able to afford, and reduce the cost. Where can you find the most affordable car loan Dealerships partner with credit unions, banks along with online lender to get you finance. For the most affordable car loan you must avoid paying extra fees for a similar loan. Banks: If your have an open account with a bank, look to get Auto loan. You might be able to score a relationship discount along with a favorable interest rate. And because the majority of dealers rely on banks to finance their business they will provide the same level of service . Online lenders: Because online lenders must compete with banks and credit unions in order to compete, they typically have the same rates. Best of all, many work with borrowers with some credit history, which makes them the best option to get low-cost loan in the event that you do not have an extensive credit background. Credit unions: As they’re non-profit, they typically offer competitive rates and similar loan conditions to banks. This means they’re one of the most affordable options to obtain an auto loan. But because you have to be an active member, it could require a couple of monthswith having an active account before you’re eligible to apply. The next step is to apply for a car loans are one of the largest expenses that people will have, so put in the effort to find the most affordable vehicle loan feasible. Calculate the monthly payment and total loan amount you are able to afford before signing off on a new set of wheels. Do your research and apply to multiple lenders to ensure you’re getting the best price. Learn more

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Writen by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ways and pitfalls of taking out loans to purchase a car.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are enthusiastic about helping readers gain the confidence to take control of their finances with precise, well-researched and accurate facts that break down complex topics into manageable bites.

Auto loans editor

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