How to Get a Lower Interest Rate

For West Bloomfield car buyers – shopping for vehicles isn’t getting any less expensive. With car prices at a premium, it’s already a strain on the average driver. Combine that with the fact that interest rates are higher than they’ve been since 2015, and you’re looking for anywhere to save money. Starting with the things you can control the most gives you the best odds of saving on your next vehicle. Learning how to get a lower interest rate can deliver big-time savings, especially over the long term. If you’ve ever asked, “Can I lower my interest rate on my car loan?” the answer is yes,  and we’ll show you how in our guide below. 

Can I Lower My Interest Rates On My Car Loan? 

If you’ve asked this question, you’re already moving in the right direction as a Southfield car buyer. Learning how to get a lower interest rate is one of the best ways to deflect the rising cost of vehicles and the already inflated price of a loan. Use the following list to help guide you toward your goal of learning how to get a lower interest rate on your next vehicle loan. 

1. Shop for the Best Total Amount Instead of the Best Monthly Payment

When many Birmingham drivers negotiate a vehicle purchase they often go for the lowest monthly payment, assuming this is the best value. However, this could hurt you in the long term. Some lenders extend the repayment period to lower monthly payments and make the loan look more attractive. Paying more monthly means you’ll shorten your loan period and pay less interest. 

2. Get Quotes from Familiar Institutions

If you have a financial institution you’ve already done business with, start by shopping for loans at these places. Because you’ve already established a relationship and they’re familiar with your payment history, you’ll likely get a much lower interest rate than you would with a completely new establishment. 

3. Do Your Research

Do your homework before obtaining a loan for anything, especially a new car. There’s nothing wrong with comparing rates, telling a lender you’ll get back to them, and just shopping around a little. Consider all options — online lenders, local banks, credit unions — leave no stone unturned. The more options you have at your disposal, the better shot you have at getting a more optimal rate. 

4. Don’t Apply for More Than One Loan Every Two Weeks

Limit your loan applications to one every two weeks. Getting a hard pull from your credit report can damage your score, especially if you get them frequently. Be selective when you apply, and try to only submit to places you’re sure about. 

5. Read the Fine Print

We can’t stress this enough. Read the fine print on any loan contract. Find out about prepayment penalties, loan processing costs, and other embedded fees from the lender. You might find out that these “small” charges end up becoming pretty substantial. Pay attention to binding arbitration as well, this prevents you from taking the lender to court if something goes wrong. 

Current Loan Rates

Now that you know how to get a lower interest rate, the final thing you should understand is what type of rate you should be aiming for. Use this list as a guideline when negotiating: 

Credit Score 781-850

• New Car: 5.07%
• Used Car: 7.09%

Credit Score 661-780

• New Car: 6.44%
• Used Car: 9.06%

Credit Score 601-660

• New Car: 8.99%
• Used Car: 13.49%

Credit Score 501-600

• New Car: 11.72%
• Used Car: 18.49%

See the Finance Department at Mercedes-Benz of Bloomfield Hills For Help

At Mercedes-Benz of Bloomfield Hills, we’ve helped drivers from Southfield and Birmingham obtain favorable interest rates for years. You can even apply online using our secure portal. We work with numerous financial institutions, increasing the odds of finding you a favorable rate. For more information, contact us today!