How to Score a Great Auto Loan Deal

When you haven’t saved enough to pay for a car in cash but urgently need to purchase one, getting an auto loan is a safe bet.

To score the best rates, however, you need to shop around. If you go to just one dealer and settle for whatever offer they have, you could miss out on more budget-friendly opportunities that are easily accessible today thanks to the internet.

So take the time to explore your options until you find the right match. After all, a car loan with a low interest rate could save you thousands of dollars.

Preparing for an auto loan

But first, let’s look at changes you can make to score a low car loan rate.

It is, for one, important to check and boost your credit score. Free credit scores may be available from your credit card company. Or you can get a relatively accurate estimate online, from sites such as Credit Sesame.

In case your score does not reach 760+, or the “excellent” range, don’t worry. You can improve your credit score in the following ways.

  • Request for an increase in the credit limit of an existing account, as this makes for a better debt-to-credit ratio. If you have a decent payment history and credit, chances are lenders will approve your request.
  • Pay down revolving debt, also to improve your debt-to-credit ratio.
  • Check your credit report for any errors. If there are errors, have them corrected right away.
  • Seek a goodwill adjustment for those few late payments, which can significantly bring down your credit score.
  • Be mindful of your credit card balances and pay on time.
  • Do not apply for a new credit card.

The amount you pay as down payment matters too. Generally, the higher the down payment, the better the car loan rate.

So try to boost your savings fast by taking an extra shift, finding an additional job or source of income, or putting stuff for sale. You could also hold off on the purchase until your savings allow for a substantial down payment.

Shopping for an auto loan

After you have taken care of your credit score and saved enough for a down payment, you can start scouting for deals.

Allot no more than two weeks for this, to minimize its impact on your credit score. Also, play out different scenarios and make the necessary calculations to determine which deal is most economical and practical.

During your search, you can check out and compare the deals of the following lenders.


Banks tend to be restrictive in terms of lending decisions, but having a good relationship and history with your bank will serve you well if you make a loan offer.

Credit unions

Not many realize that credit unions are a great choice, especially if you are struggling with your credit score. Credit unions have loan officers who you can talk to in person or over the phone, giving you the opportunity to discuss your predicament and prove that you can effectively handle money. This personal conversation can work in your favor, although it may take a while for your loan application to be processed.

Lending Tree

If you want to cover a lot of ground at once, Lending Tree is an excellent place to start. This website is a loan aggregator, which allows you to view and review auto loan rates and monthly payments from numerous lenders. It is perfect for those who would like to find out the average amount of financing they are eligible for or are in the hunt for new prospective lenders.

Here’s how it works: You enter the loan details—the amount of the loan and of your down payment plus the vehicle make and model you have in mind. You’ll then be directed to the offers page, where offers can be sorted by loan term or APR. You can expect an email and follow-up phone call from featured offers. For the actual offer, you need to personally get in touch with the lender.


Another alternative is CarsDirect, which narrows your search to local lenders. You can even use the site to look for cars in your area.

The website’s application process is simple and fast, and the results you get will include good dealer financing options. However, you have to wait a bit to receive via email the lender information you need.

As with other types of financing, finding the best auto loan takes some work. But with the right source of funding, you can close the deal with a low interest rate and finally get your hands on that car you’ve been eyeing.