Save money and make an informed decision when buying a car by focusing on the cost of the vehicle, loan interest, and insurance payments. Shop around for the best auto loan rate and compare car prices. Use affordability calculators to set a budget and get multiple insurance quotes. Find out more in this comprehensive guide.

Questions Answered in this Article

1. How can I secure the best auto loan rate?

• To secure the best auto loan rate, it’s important to shop around before committing to a loan offered by a car dealership. Consider getting interest rate estimates from banks, credit unions, or online lenders, and take advantage of pre-qualification to determine which lender offers the lowest rate.

2. How can I find the lowest auto loan rate?

• You can find the lowest auto loan rate by using preapproved loan offers. Present the best rate to the car dealership and negotiate further, or use a lower-rate loan if they can’t match or beat the rate. Reducing the interest rate by a few percentage points can significantly lower overall loan payments.

3. How can I save money when buying a car?

• You can save money when buying a car by taking your time to compare prices and models from different sources, researching pricing guides, setting a budget based on the maximum amount you can afford, and getting multiple insurance quotes.

4. What should I consider before buying a car?

• Before buying a car, consider the average cost of the car you want, similar models with the same features that may be priced lower, and the long-term cost implications such as interest rates, sales tax, registration fees, maintenance and repairs, gas, and insurance.

5. How can I get multiple insurance quotes when buying a car?

• To get multiple insurance quotes when buying a car, start by getting quotes from different insurance carriers. Compare car insurance rates from different insurers based on factors like your age and driving history, and ask about gap insurance if you financed your car.

MORE: The True Cost of Car Ownership – Monthly Payments, Expenses, and Saving Strategies

Maximizing Savings on Your Car Purchase

To maximize savings when buying a car, focus on the following key areas: the cost of the vehicle, loan interest, and insurance payments. Negotiating and managing these expenses prior to making a commitment can prevent overspending and regret. Buying a car is a long-term financial obligation and being mindful of these costs can result in significant savings over time.

To secure the best auto loan rate, it is important to shop around before committing to a loan offered by a car dealership. Auto dealers make money from arranging loans, so you may end up paying more interest if you do not explore other options. Consider getting interest rate estimates from banks, credit unions, or online lenders, and take advantage of pre-qualification to determine which lender offers the lowest rate without affecting your credit score.

MORE: Auto Loan Refinancing: Everything You Need to Know

Securing the Best Auto Loan Rate

With preapproved loan offers, you can present the best rate to the car dealership and negotiate further. If they can’t match or beat the rate, you still have a lower-rate loan to rely on. By reducing your interest rate by a few percentage points, you can significantly lower your overall loan payments. For example, a $40,000 loan with an 8% APR over 60 months would result in paying $8,664 in interest. However, with a 6% APR, you would pay $6,399, a savings of $2,265 over the life of the loan.

Comparing Car Prices and Models

Don’t rush into purchasing the first car you find. Taking your time to compare prices and models from different sources can help you make a more informed decision and possibly save you money.

Before buying, research pricing guides like Edmunds or Kelley Blue Book to see the average cost of the car you want. You can also use car-buying apps like TrueCar to compare new and used car listings from online retailers and local dealers for pricing and other information. This research can also help you find similar models with the same features that may be priced lower.

Remember that the car you choose will have long-term cost implications such as interest rates, sales tax, registration fees, maintenance and repairs, gas, and insurance. Tools like Kelley Blue Book’s 5-Year Cost to Own can help you estimate these expenses for various models.

Setting a budget based on the maximum amount you can afford can also help you stay within your financial limits. You can use NerdWallet’s auto affordability calculator to set a monthly payment limit that fits your budget.

MORE: Understanding and Navigating Dealer Financing: How to Get the Best Deal

Shopping for Car Insurance

When buying a car, it’s a good opportunity to shop for car insurance as well. Insurance rates can vary greatly among companies, so getting multiple quotes can result in significant savings.

Start by getting quotes from different insurance carriers. A new company may offer you a lower rate, but don’t forget to check with your existing insurance provider, who may offer loyalty discounts.

Use Edfed to compare car insurance rates from some of the largest insurers in the country, based on factors such as your age and driving history. When speaking with insurance providers, ask about gap insurance if you financed your car. Gap insurance pays the difference between the balance of your loan and the value of your car if it is declared a total loss. Car dealers will often try to sell you gap insurance and include the cost in your loan, but gap insurance from your insurance carrier is typically less expensive and interest-free.

More: Popular auto loan options

Summary

• To save money when buying a car, focus on the cost of the vehicle, loan interest, and insurance payments.
• Negotiate and manage expenses prior to making a commitment to prevent overspending and regret.
• Secure the best auto loan rate by shopping around and considering interest rate estimates from various sources.
• Take advantage of pre-approval to determine the lowest loan rate without affecting your credit score.
• Don’t rush into buying the first car you find. Take your time to compare prices and models from different sources.
• Research pricing guides and use car-buying apps to compare new and used car listings for pricing and information.
• Set a budget based on the maximum amount you can afford and use auto affordability calculators to set a monthly payment limit.
• Shop for car insurance by getting multiple quotes from different insurance carriers.
• Consider factors like your age and driving history when comparing insurance rates.
• Ask about gap insurance if you financed your car. Gap insurance from your insurance carrier is typically less expensive and interest-free.