Let’s face it, cars are expensive. Today’s car loan can cost more than you’re parents’ first mortgage. The reality is, that it’s not only the price of the car, but also the gas, insurance, maintenance, car washes, and more that really add up. For most of us, there are also considerable costs associated with the auto loan. I love having a nice car, but with the economy as it is, every expense is worth checking out.

How to save money on your next auto loan using my strategies:


  1. Improve your credit. Nothing has more impact on the terms of your loan than your credit score: the better your score, the lower the interest rate. If your credit history is sketchy, it’s going to cost you. So if you have credit problems, put off buying that new car until you’ve done some work on your credit.
  2. Avoid small loans. In many cases, interest rates tend to be higher on small loans. If the car costs less than $5,000, then it’s best to simply save up ahead of time and pay cash for the car. That doesn’t mean that you should get a Porsche because the loan is cheaper and if you’re desperate for a vehicle, this may not be an option, but, throwing away money is never a good option.
  3. You can refinance an automobile at a lower interest rate if interest rates have fallen since you bought the car. This especially makes sense if you’ve also been able to improve your credit since you obtained your loan. You could easily save $100 per month by refinancing. Zippy’s friend Shana does this with almost all of her car loans and it has saved her $$$$.
  • With the subsequent reduced payment schedule, you can apply the extra you’re saving toward other investments or you can pay off your car sooner.
  1. Shop around for financing. It might be easiest to get your financing at the dealership, but it’s rarely the best place. Finding a better financing offer means extra money that could be in your pocket instead of the dealer’s. Check with your bank or credit union, as well as online.
  • Check out what the dealer has to offer, but get some other financing quotes and see what makes the most sense.
  1. Consider leasing. While leasing is usually considered to be more expensive in the end than purchasing, it can make sense if you never own a car long enough to get it paid off. I lease because my payments are so much lower, and then will finance the remainder of the car at the end of the lease so that I own it.
  • Your monthly payment will likely be less and the taxes are less, since you usually only pay tax on your payments, not on the value of the car.
  1. Find a less expensive vehicle. Cars today are almost universally quite reliable. There’s almost no practical difference between a $10,000 car and a $100,000 car, both will get you where you need to go. All the extra cost has little to do with how reliably or safely the car will get you from point A to point B.
  • Consider purchasing a slightly used automobile to really save some money. If you can find a car that’s almost new with low mileage, you get all the advantages of a new car, including the warranty, without the new car cost. We used to exclusively buy certified used cars from the dealership so that we got a great warranty along with a good price.

There are several ways to save money on your next auto loan. If you have the luxury of time on your side, fix any credit challenges you may have and shop around for the best financing terms. Where there’s a will, there’s a way. Do what you can to keep as much of your money as possible.