 TITLE: How to Negotiate a Car Loan CONTENT: Other Ways to Reduce Your Auto Loan Interest Rate\n-------------------------------------------------\nBanks and credit unions charge interest to compensate for the risk they take on when lending money. So one key to lowering your interest rate is to reduce the risk you present to prospective lenders. Here are some ways to do that:\n*   **Make a larger down payment.** The more you borrow from a lender, the more it stands to lose if you default on your payments. By putting more money down or trading in a vehicle, you'll not only reduce how much you have to borrow, but you could qualify for a lower interest rate.\n*   **Reduce the sales price.** Again, the less money you borrow, the less of a risk you pose to lenders. And, ultimately, you'll save more money overall if you set your budget based on how much the vehicle costs rather than the monthly payments, which car dealers sometimes focus on. You can reduce the sales price by choosing a cheaper car or declining add-ons, such as service and maintenance contracts and gap insurance.\n*   **Opt for a shorter repayment term.** Lenders typically offer lower interest rates with shorter repayment terms because there's less of a chance you'll default over, say, four years than seven years. The only caveat is that shorter repayment terms equal higher monthly payments, so you'll need to make sure you can afford them.\n*   **Get a cosigner.** If you have bad credit or you simply want more negotiating power, consider asking a creditworthy cosigner to apply for the loan with you. Your cosigner agrees to make payments on the loan if you can't, effectively reducing the risk of default for the lender. Just keep in mind that if someone cosigns with you, the loan also shows up on their credit report, and payment problems will damage their credit history.\nConsider these and other ways to reduce your interest rate before it's time to negotiate with the dealer or lenders.  \nHow to Lower Auto Loan Interest Rates After Getting a Loan\n----------------------------------------------------------\nEven after all your efforts, it's still possible you won't qualify for the interest rate you want. Fortunately, that doesn't mean you're stuck with a high interest rate for the entire term of your loan. If you can improve your credit score, you may be able to refinance your car loan with a different lender and score better terms.\nHere are a few actions you can take that will contribute to your overall creditworthiness:\n*   **Check your credit report.** Your credit report provides a list of all your current and some or all previous credit accounts, and can provide you with the information you need to know which areas you need to address.\n*   **Dispute** inaccurate or fraudulent information. In rare instances, incorrect or even fraudulent information could show up on your credit report. If this happens, you can file a dispute with the credit reporting agencies to have the details corrected or removed.\n*   **Pay on time, every time.** If you're behind on payments with any of your credit accounts, get caught up as quickly as possible, then focus on paying on time every month going forward.\n*   **Pay down your credit card balances.** Your credit utilization ratio, which is your total card balance divided by your total credit limit, is an important factor in your credit score. In general, the lower your utilization ratio, the better, so work on paying down your credit card debt and keep it relatively low.\n*   **Use your utility payments to boost your score.** Utility and phone payments haven't had any impact on your credit score historically. But with Experian Boost™† , you can connect your bank accounts and opt to have the positive payment history associated with those accounts added to your credit file, which can help increase your FICO® Score.\nIt's not always easy to know when to refinance a car loan, but it's generally best to consider it if your credit score has improved or interest rates have gone down since you took out the first loan.\nAgain, as you go through this process, it's a good idea to shop around and compare rates from multiple lenders. When you find the best deal for your situation and the lender approves the loan, it will pay off your original loan on your behalf.\nTo give you an idea of your potential savings, let's say you initially took out your car loan when your credit scores were much lower than they are now, and your $15,000 loan had a 15% interest rate and 60-month repayment term—that gives you a monthly payment of $357.\nNow, let's say you're roughly 16 months into paying off your loan, and your loan amount is down to $12,000. Your credit score is now in the fair range, so you start shopping around for new rates and the lowest you qualify for is 8%. If you were to replace your current loan with a new one that has a 48-month repayment term, your monthly payment would drop to $293, and you'd save $1,601 in interest over the remainder of the new loan.  \nNever Settle\n------------\nIf your credit isn't in stellar shape, you may have a hard time qualifying for some of the best interest rates auto lenders have to offer. But that doesn't mean you have to settle for a high interest loan, even if you have bad credit.\nTake your time to consider your options, shop around and compare interest rates, and look for opportunities to reduce the amount of risk lenders take on. If you have time before you need a new car, don't rush into anything. Be prepared to walk away if the terms of the loan don't match your budget.\nAnd if you don't have time, take what you can get now and work on building your credit, so you can qualify for a lower interest rate through refinancing in the future. END