How to Get the Lowest Auto Loan Rate Possible

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Even with poor credit.


Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - February 23, 2021

Getting the lowest interest rate you can take a little planning, and possibly sprucing up your credit score if it isn’t the best. Here are some tips on increasing your chances of getting the lowest rate possible.

1. Beef Up Your Credit Score

The biggest determinant of your interest rate is your credit score. The better your credit score, the more likely a lender is to approve you for the loan and extend you a lower interest rate.

Beefing up your credit score can take time, but there are a few easy things you can do to ensure its growth. A handful of credit-building tips include:

  • Keeping your credit card balances below 30% of their spending limits
  • Paying all of your bills on time
  • Keeping accounts out of collections
  • Correcting errors on your credit reports (called a dispute)
  • Taking on credit you can handle
  • Use credit reporting services such as Experian Boost

By implementing these practices and raising your credit score, you can work to qualify for the lowest interest rate possible for your situation.

2. Consider a New or Newer Vehicle

Auto lenders typically prefer approving loans for vehicles in good shape, with lower mileage, and ones with a clean title and history. Brand new cars, fresh off the line, are all of these.

New or newer vehicles come with more safety features, have less of a chance of mechanical failure, and generally represent a higher resale value. For these reasons and more, lenders tend to assign lower auto loan interest rates for newer cars.

Older cars tend to be less expensive, which means a lower monthly payment on your auto loan. However, you may be faced with a higher interest rate than you’d like. To increase your odds of qualifying for a lower interest rate, opt for a new or newer vehicle.

If a brand new car isn’t something you can afford or want, consider a certified pre-owned (CPO) car. These vehicles are typically only a few years old, and many are usually just coming off lease. CPOs are inspected and refurbished by a manufacturer-certified technician and come with some form of a manufacturer warranty.

3. Have a Down Payment

Down payments are extremely useful when you’re financing anything, especially a vehicle. They lower the car’s selling price lowering the amount you need to finance, increase your approval odds, and can sometimes get you lower interest rates.

A borrower that comes prepared with a down payment shows they have skin in the game. Having cash to put down shows the lender that you’re willing to invest in your own success, and auto loans that start with a down payment have a higher success rate overall. With cash in hand, you’re proving to the lender that you’re financially ready for a car loan and you may be able to land a lower interest rate.

4. Try for a 0% Interest Deal

A 0% interest rate is the lowest rate you can get for auto financing – if you qualify! It’s not uncommon to see advertisements from manufacturers offering a 0% interest rate for a brand new vehicle. These deals are controlled by the vehicle’s manufacturer, and their main purpose is to persuade you to purchase a specific brand or car. Not having interest charges over the course of the loan, can save you tons of money – potentially hundreds or thousands of dollars.

Qualifying for a 0% interest rate deal often means having an excellent credit score. If your credit score is below 660, you may run into issues getting approved for a 0% interest deal – but it won’t hurt to read through the requirements to see if you make the cut.

5. Work With the Right Lender

Everyone’s situation is different, so what works for one person may not work for another. If you have a lower credit score and/or a tarnished credit history, then applying for vehicle financing with a direct auto lender may not leave you much room for negotiation on rates or terms. These lenders – usually banks or credit unions – prefer good credit borrowers for the most part.

Knowing where your credit score stands is a good first step in determining the right lender for your circumstances. If your credit score is considered poor, then a subprime lender may be more in your wheelhouse. These lenders are equipped to work with borrowers in unique credit situations such as a past repossession, current or post-bankruptcy, or those with a sparse credit history. By applying with a lender that actively works with borrowers in tough situations, you have a better chance of getting the car loan you need.

Take the Leap!

Car shopping can be stressful. Everyone tries their hardest to find the best deal, but finding the right dealership is equally important. Not every dealership is signed up with subprime lenders. If you’re struggling to find a lender that can accommodate your situation, then look no further.

At CarsDirect, we’ve been connecting borrowers to dealers with bad credit lending resources for over 20 years, and we want to help you too. Using our expansive network of dealerships, we’ll look for a dealer in your local area that has the lenders you're looking for. Start by filling out our free auto loan request form and we’ll get to work for you!


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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