How to Get the Best APR on a Car Loan

The Annual Percentage Rate (APR) of your car loan is the yearly interest rate on any money you borrow from a lender. The APR includes such things as the principal, any taxes on the vehicle, and any interest and pre-paid finance charges that are a part of your loan.

A low APR on a car loan saves you money with your monthly payments and on the total amount paid in interest. It takes a bit of research, but you should find the best APR before you settle on a loan.

Part 1 of 3: Research your options

The first step when searching for a low APR is to research your options. Part of this includes getting a credit report and learning your credit score. Your credit score is one of the biggest influences on the APR for which you qualify. Some other items to research include comparing the interest rates offered by the various lenders you are interested in using and finding out how vehicle age, type, and other factors can affect the APR.

person filling out information for credit report

Step 1: Get your credit report. Start by getting a copy of your credit report from annualcreditreport.com, a site set up by the three national credit reporting agencies to supply free credit reports to consumers, as required by federal law.

  • Check it to see if you have any late payments, collections, or other negative information. Make sure it is accurate and free of errors.

Step 2: Check your credit score. Federal law dictates that the three national credit reporting agencies have to each give you one free credit report per year. Any more than that and you have to pay.

  • Alternatively, you can sign up for credit monitoring at one of the free credit sites, such as Credit Sesame or Credit Karma.

  • Note: While the credit score you receive won’t always be exactly same, it can give you an idea of your credit score.

Step 3: Check with your credit card company. Another option is to check with your credit card company to see if they provide free credit scoring information. Many credit card companies do this as a service to their card holders.

filling out information on credit union site

Step 4: Compare interest rates with various lenders. Find out the best rates available.

Step 5: Gather your paperwork. Get all required paperwork together to take to a lender. Loans with low documentation requirements often come with a higher interest rate.

Step 6: Consider two or three models of vehicles. Certain models may come with a higher interest rate.

Part 2 of 3: Shop around for interest rates

Once you know your credit score, compare the interest rates offered by the lenders you are interested in using. Among the various lenders you are looking at, find the best rates and terms available.

Step 1: Ask your bank. Talk to your local bank to find out the interest rate they can give you. You can also check with local credit unions. Their interest rates are often slightly lower than traditional banks.

Step 2: Call dealerships. Find out the interest rates of various car dealers in town by calling and asking to talk to the finance department.

  • Car dealers often offer special deals, including rebates, and have some of the best financing terms available.

Step 3: Shop online for auto loans. Because you can provide all documentation online, you aren’t limited to local financial institutions.

Part 3 of 3: Get financing in place

Now that you have chosen a potential lender, get all of the required paperwork together to take to the lender you chose. Keep in mind that loans with low documentation requirements often come with a higher interest rate.

Step 1: Get a loan. Get pre-approved for a loan before shopping for a vehicle. This allows you to focus only on the vehicles that fall within the amount you can borrow.

  • Even if you don’t decide to go with this lender, you can use the pre-approval as a negotiation tool.

Step 2: Choose your term length. Select a shorter term for your car loan, which often comes with a lower APR.

  • The bad thing about a short-term loan, though, are the higher monthly payments. But if you are okay with paying a higher price, then this is a good option.

Step 3: Ask a dealer to beat your pre-approval. Take your pre-approval to a car dealer to see if they can beat the terms. Most dealers want to make a sale so they might lower the APR they are offering in order to get you to finance your vehicle through them.

Step 4: Pay more up front. Increase your down payment to give you more room for negotiation.

  • By increasing the amount you pay up front, you decrease the amount you need to have financed. Couple that with a lower APR, and you can greatly reduce the amount you pay over the term of the loan.

Step 5: Ask about rebates. Find out if you can exchange some of the included bonuses given with a car for a lower APR. This may include cash rebates or special packages, which you can do without.

  • Tip: If you can’t get a low interest rate now and you need the car, choose the best loan and then refinance in six months for a better rate. By refinancing to a lower interest rate, you can save big, especially if the interest rate falls by a full point or two.

Step 6: Consider two or three models of vehicles. Certain models may come with a higher interest rate.

Finding a loan with a low APR is one sure way to save money when financing a vehicle. Just remember to have a pre-purchase car inspection performed by one of our expert mechanics before buying a used vehicle.


Next Step

Schedule Pre-purchase Car Inspection

The most popular service booked by readers of this article is Pre-purchase Car Inspection. YourMechanic’s technicians bring the dealership to you by performing this job at your home or office 7-days a week between 7AM-9PM. We currently cover over 2,000 cities and have 100k+ 5-star reviews... LEARN MORE

SEE PRICING & SCHEDULING

The statements expressed above are only for informational purposes and should be independently verified. Please see our terms of service for more details

Recent Pre-purchase Car Inspection reviews

Excellent Rating

(4,845)

Rating Summary
4,518
175
36
38
78
4,518
175
36
38
78

Chris

22 years of experience
2024 reviews
Chris
22 years of experience
Honda Pilot - Pre-purchase Car Inspection - Laguna Niguel, California
got there on time. communicated great. did the pre-purchase inspection quickly informing us along the way. highly recommended.
Mercedes-Benz C320 - Pre-purchase Car Inspection - Laguna Niguel, California
Perfect expert inspection. Couldn't have asked for more. Chris did not let the dealer sweet talk or try to swindle his way out of mechanical issues. Loved it. Would recommend Chris 100%

Carlos

28 years of experience
404 reviews
Carlos
28 years of experience
Jaguar XJR - Pre-purchase Car Inspection - Costa Mesa, California
Carlos was very professional good communication very detailed I couldn’t have asked for anything better
Jeep Wrangler - Pre-purchase Car Inspection - San Dimas, California
Carlos was great. On a pre-purchase car inspection he gave me a good summary of the pros and cons in easy-to-understand terms and was very helpful in giving me a balanced and intelligent overall view of the vehicle's condition.

Attila

19 years of experience
745 reviews
Attila
19 years of experience
Jaguar XE - Pre-purchase Car Inspection - Springfield, New Jersey
unfortunately i could not view the car in person. But Attila made me trust and value his opinion not only thru his words but also his professionalism and service.
Toyota Avalon - Pre-purchase Car Inspection - Midland Park, New Jersey
Atilla inspected the car and pointed out all the issues the car had, and why it was not worth purchasing.

Shawn

12 years of experience
163 reviews
Shawn
12 years of experience
Dodge Ram 3500 - Pre-purchase Car Inspection - Harleysville, Pennsylvania
Shawn was friendly, efficient and knowledgeable. He kept me informed as he went and did a satisfyingly thorough job. On top of that, he was fun to hang with! Would use him again, for sure.
Hyundai Elantra - Pre-purchase Car Inspection - Chester Springs, Pennsylvania
I have put off buying a ‘new’ car because I’m not mechanical and couldn’t tell if I was throwing my money down the tubes. There was no more putting it off. Shawn was able to verify what I expected: the car in question has external issues but the engine, etc. was sound. The seller was impressed that he did not have to drive to a mechanic for a pre-sale inspection and appreciated the convenience. You have two new customers.

Need Help With Your Car?

Our certified mobile mechanics make house calls in over 2,000 U.S. cities. Fast, free online quotes for your car repair.

GET A QUOTE

Related articles

How to Buy a New Car From a Fleet Salesperson
If If you’re in the market to buy a brand new vehicle, you'll need to strike a deal with a sales staff member at a car dealership. Regardless of the brand you are intent on purchasing, all dealerships employ salespeople...
What's the Cheapest Way to Finance Buying a Car?
When When you finally make that big decision to buy a new car, there are many options you have to consider. Obviously, you have to consider what kind of car you want and what prices fit into your budget. Financing...
How to Buy a Car From an Individual
Part Part 1 of 6: What is a “private party?” If you’re in the market for a used car, you can chose to go to a dealership or buy a car from a private party. Buying from a private party...

Related questions

C121C torque request signal denied and P0334 Cam shaft sensor

The cam sensor code (actually P0344), is known problem, and there is a Technical Service Bulletin (232460) that addresses this fault and repair. Check with your Dodge dealer to understand what the TSB covers or not. The C121C code has...

Gas gauge not registering fuel level

Hi there, and thanks for asking about the problem with your 2016 Lexus RX450H. This doesn't sound like a tank problem, but rather the scenario where the tank includes 2 fuel gauge sensors, and 2 fuel pumps - a fairly...

Transmission replaced, but still slipping - 2009 Kia Borrego

There's a lot going on here. As far as the transmission concerns, your repair should be under warranty since you had the work done at the dealer. For the rest of the concerns, you may want to hire another technician...

How can we help?

Our service team is available 7 days a week, Monday - Friday from 6 AM to 5 PM PST, Saturday - Sunday 7 AM - 4 PM PST.

1 (855) 347-2779 · hi@yourmechanic.com