back to articles | December 31, 2018 | Greg Thibodeau

Categories: Types of Car Loans

Low Cost Auto Loans


While most people are interested in low cost auto loans, it's important to understand what's behind the headline. What appears to be a low cost auto loan could actually have a lot of hidden costs.

Low Cost Auto Loans-What It All Means

Ads for 0% interest or 1.99% low cost auto loans seem to be everywhere. Unless your credit is near perfect you probably won't qualify. Generally these low cost loans are only available to those with excellent credit. Even then, the term of the loan are often not advantageous. As a general rule, the shorter the auto loan term, the higher the loan payment will be. Most of us need low monthly payments so we don't squeeze our monthly budgets.

Low Cost Auto Loans and APR

Pay attention to the annual percentage rate (APR) for your auto loan. APR is a federally mandated method of stating an interest rate. The lower the rate, the less interest you'll pay over the term of the auto loan. The interest rate (APR) you receive for your auto loan is based on numerous factors. Your credit score, loan terms, the amount financed, the auto's value and the lender all come into play.

Where to Find Low Cost Auto Loans

Low cost auto loans can be found if you're selective and you do your homework. Dealing directly with auto loan lenders will usually get you the best deal and the lowest cost. An easy way to make the comparison is to complete an online loan application at a direct lending site and compare. In the privacy of your own home, arrange for financing before you head to the dealership and save! Then you'll see first hand what low cost auto loans are all about.

A Low Cost Auto Loan Scam

How can a car have 0% financing? Most car loans like that are subsidized by the car manufacturer. The dealer just charges you the manufacturer's suggested retail price (MSRP) so the 0 % financing has little affect on his margins.

People get pulled into this scam because we like the idea of 0%. However, what's the point in 0% if you're paying way too much for your automobile? You have a better chance at getting a low cost auto loan if you negotiate the price of the car. The finance rate has little to do with the intrinsic market value of your automobile.

Getting a low cost auto loan is your goal when buying. Be smart and research online for the best deal for your new auto.