Choosing a new (or new-to-you) car is fun, right? Marques and models, trims and tricks, gimmicks and gadgets must all be weighed and analysed against personal preferences and family budgets, whittling down the options into a shortlist of front-runners.

Smart buyers follow the same painstaking selection process for their auto loans. Seeking the most competitive terms, they check not only the monthly repayments, but also interest rates, durations, fees, and total costs.

Shop Around for Your Vehicle Financing

Thanks to the Internet, it’s easy to gather multiple car loan offers, compare them, and then negotiate with at least three lenders. But before applying for pre-qualification, it’s important to make sure you’re an attractive auto financing candidate.

The cornerstone of your reputation in the loan market is your credit score. This should be at least 670, and preferably higher. As conditions vary by lender and even region, shopping around is the best way to find the most advantageous terms for financing your new ride.

Getting A Great Car Loan Deal

Here are ten simple steps for getting the best possible deal on your auto financing – while saving a lot of time, hassle, and money:

  1. Check your credit score by accessing your credit reports. If your score is under 600, you should work on improving it before applying for a car loan, mainly through paying your credit cards on time and settling as much current debt as you can.
  2. Research the best auto loan and lender for your circumstances. Check with your local Better Business Bureau to make sure they’re trustworthy, and read the reviews to narrow down your list of potential funding sources.
  3. Work out the best terms for yourself, using an online auto financing calculator to pinpoint the lowest costs over the shortest period that you can afford, after including insurance, maintenance, fuel, and parking in your monthly budget.
  4. Remember that the ‘best terms’ involve far more than just the lowest monthly instalments, as they encompass down payments and annual percentage rates (APRs), rather than just interest rates, durations, and penalties.
  5. Longer loans (up to 96 months) offer enticingly low monthly paybacks, but generally lead to overall vehicle prices that can be up to a third higher than the sticker on the showroom floor.
  6. All your documentation should be ready for submission before you start applying for loans. If you keep all your enquiries within a fourteen-day window, your credit score remains unchanged. This is because the FICO system handles all credit applications within this period as rate shopping, classifying them as a single enquiry.
  7. Check out lender websites for prequalification tools that let you view potential loan terms, interest rates, and monthly repayments without affecting your credit score, upping the likelihood of approval under favourable terms before sending in a formal application.
  8. For faster auto loan decisions, preapproval is a simple process, where you provide your basic personal data (ID number, employment status, and income) for the lender to run a soft credit check that produces results in just a few minutes.
  9. Make sure your vehicle financing agreement is definitive, clearly stating the amounts of the down payment and the monthly repayments, the interest rate, the term, the delivery method, and other fees and charges. If your agreement is conditional or contingent – listing conditions you must meet in order to receive your funds – then the lender could alter its wording to less advantageous terms.
  10. Pay close attention to the small print, particularly mandatory binding arbitration (which removes your right to take the lender to court) and prepayment penalties that discourage you from paying off your debt ahead of schedule. Remember, a loan agreement is a binding document that will affect your finances for years to come.


Smart car buyers do everything they can to upgrade their appeal to lenders, making sure they get the best possible conditions for their auto loans.

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