When it comes to financing a vehicle, securing the lowest possible interest rate can save you thousands of dollars over the life of your loan. But how do you get the best deal on an auto loan? Whether you’re buying new or used, these five tips will help you lock in a great rate and get behind the wheel without overpaying. Plus, at People Driven Credit Union, we’re committed to helping our members find affordable auto loan options with competitive rates and exclusive discounts.
1. Boost Your Credit Score
Your credit score is one of the biggest factors determining your auto loan interest rate. A higher score generally means a lower interest rate, translating into lower monthly payments and less interest paid over time.
How to Improve Your Credit Score:
- Pay bills on time: Late payments can negatively affect your score.
- Pay down debt: Reducing your overall debt load improves your debt-to-income ratio.
- Avoid opening new credit lines right before applying for a loan.
At People Driven Credit Union, we offer guidance for members with varying credit profiles and can help you explore loan options that fit your financial situation. Learn more about improving your credit score.
2. Get Pre-Approved for Your Auto Loan
Getting pre-approved for an auto loan before you start shopping is a smart way to secure the best rate. Pre-approval lets you know exactly how much you can afford, and it often results in better loan terms since you’re showing lenders you’re a serious and qualified buyer.
Benefits of Pre-Approval:
- Lock in a competitive interest rate before visiting the dealership.
- Strengthen your negotiating power with dealers.
- Speed up the car-buying process.
At People Driven Credit Union, the pre-approval process is quick and easy. You can apply online, and we’ll contact you with your loan options so you’re ready to shop.
3. Make a Larger Down Payment
While many dealerships offer low or no down payment options, putting down a larger amount upfront can significantly reduce your loan amount and monthly payment and lower your interest rate. A down payment reduces the overall risk to the lender, often resulting in better loan terms.
Benefits of a Larger Down Payment:
- Lower monthly payments.
- Less interest paid over the life of the loan.
- Possibly qualify for a lower interest rate.
At People Driven Credit Union, we recommend making at least a 10-20% down payment if possible. This helps reduce the overall cost of your loan and keeps your financial future in check.
4. Choose a Shorter Loan Term
While longer loan terms can lower your monthly payments, they often come with higher interest rates and increase the total interest paid over the life of the loan. Opting for a shorter loan term can reduce your interest rate, helping you pay off your loan faster and save money.
Why Choose a Shorter Loan Term:
- Pay less in interest overall.
- Build equity in your vehicle faster.
- Own your car outright sooner.
At People Driven Credit Union, we offer flexible loan terms. You can choose a repayment period that fits your budget while saving on interest.
5. Take Advantage of Credit Union Discounts
Credit unions like People Driven Credit Union are member-focused and often offer better rates than traditional banks and exclusive discounts for members. One of the easiest ways to lower your interest rate is by taking advantage of special promotions or rate discounts.
People Driven Credit Union Auto Loan Discounts:
- AutoPay Discount: Lower your interest rate by 0.25% when you enroll in AutoPay and Direct Deposit from your PDCU checking or savings account. Not only does this save you money, but it also ensures you never miss a payment.
- Member Promotions: Look for seasonal rate specials or member-exclusive offers to help you lock in a lower rate.
Drive into the New Year with 4.99% APR*
December 1, 2024 through March 31, 2025
Rates as low as 4.99% APR* for up to 72 months
For eligible new loans for cars, trucks, and SUVs (new or used) and loans refinanced from another lender (People Driven Credit Union loans are not eligible) - Loans must close within 30 days of application -
Drive Away with a Great Rate
Getting the best auto loan rate doesn’t have to be complicated. By following these tips—improving your credit score, getting pre-approved, making a larger down payment, choosing the right loan term, and taking advantage of discounts, you can secure a low interest rate and enjoy your new car without worrying about overpaying.
At People Driven Credit Union, we’re here to help you every step of the way. Ready to find the perfect loan for your next vehicle? Apply today or visit one of our branches for personalized assistance.
