9 Tips for Getting the Best Auto Loan Deal This Season

Summer is a great time to shop for a car, with plenty of sales events, price drops, and cash-back offers. But it’s easy to get swept up in the excitement and overlook the fine print, especially when it comes to financing. Agreeing to a high-interest loan can make your car cost thousands more in the long run. 

Here are nine things to know before you take that first test drive.

Check your credit.

Your credit score affects what loan rates you can get, regardless of the season. Even modest credit improvements can unlock premium car financing offers that dealers advertise during peak buying periods. Request free copies of your credit reports from AnnualCreditReport.com and dispute any errors before visiting dealerships.

Compare auto loan rates.

Don’t rely solely on dealer financing when searching for the best auto loan rates. Banks, credit unions, and online lenders often offer more competitive car financing than dealership options. Credit unions typically provide members with the lowest auto loan rates and flexible repayment terms.

Set an auto loan limit.

Summer car promotions can tempt buyers to exceed their financial comfort zone. Add up the total projected vehicle expenses, including monthly payments, insurance, gas, and maintenance costs. Keeping total car-related expenses under 20% of your take-home pay ensures transportation costs don’t overwhelm your household budget.

Plan your down payment strategy.

A large down payment helps you secure more favorable loan terms. Significant cash down demonstrates buyer commitment and may qualify you for premium financing tiers. You’ll also have the added benefit of reducing your loan amount, which can result in a smaller payment, lower total interest charges, or both. 

Choose the right auto loan term length.

Your loan term significantly impacts total costs, regardless of promotional rates. Shorter terms usually have lower interest rates and result in lower overall interest expenses. While 72-month auto loans seem appealing for lower payments, they often cost thousands more over time. It might be wise to focus on the shortest auto loan term you can afford rather than the smallest monthly payment.

Separate vehicle price from negotiations.

Successful car buying requires treating pricing, trade-in value, and financing as separate negotiations. Some predatory lenders make more money by mixing these elements, making poor auto loan deals appear like good ones. Establish your purchase price first, determine trade-in value independently, then evaluate financing against your pre-researched auto loan options.

Read the fine print carefully.

Those summer sales ads with eye-catching auto loan rates usually come with strings attached. “Zero-percent car financing” often requires excellent credit, substantial down payments, or shorter terms that limit eligibility. Cash-back offers might exclude special financing rates, forcing you to choose between immediate rebates and long-term interest savings.

Consider cosigners for better rates.

If your credit doesn’t qualify for the best auto loan rates, adding a qualified cosigner can unlock better terms. This can be helpful during promotional periods when premium rates are available but restricted to excellent credit borrowers. A cosigner’s established credit history reduces lender risk, potentially lowering your auto loan rate by several percentage points.

Understand how APR affects affordability.

The annual percentage rate (APR) shows the total cost of borrowing, including interest and any loan fees. Unlike the interest rate alone, the APR gives a more accurate picture of what you’ll actually pay. Use it to compare loan offers and choose the one with the lowest overall cost.

Summer brings real deals, but only informed buyers can spot true value amid the marketing hype. Credit Union of Colorado offers competitive auto loan rates year-round. Learn more or apply today!