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A low interest car loan can be yours if you know how to go about getting it. A lot depends upon how informed you are. For instance, it is important to know that car loans are linked to the Prime Rate, set by the federal government and this rate fluctuates, so if the Prime Rate is high there is no way you will be able to find a low-rate car loan. You should time your loan application and budget your savings for a car purchase to make the best use of a low Prime Rate.

Auto loans for shorter periods will attract lower interest rates; however this does not mean that your monthly payments will also be low. These could well be higher than what you would pay monthly for a long-term loan. Also your downpayment would be higher. Check if there is any discount if you authorize the lender to make a direct monthly withdrawal from your account. You may wish to research low-rate auto loans for used cars – even these are available and can be a good option for first-time car owners. The interest rate also depends upon your negotiation skills; bargain with the lender. Inquire about discounts, repayment schemes, and incentives. Perhaps the most important factor in a low-interest auto loan is your credit score. A good and healthy credit score lets you get a car loan at the best possible rates that a lender can offer. Maybe you can first take steps to improve a shaky credit score before you approach a lender for a car loan.

Ask questions and do not hesitate to get clarifications till you are satisfied. Do not sign anything till you have understood what it’s about. Read the fine print to avoid unpleasant surprises later on.

Because the service can be availed online, you can easily get all the answers without leaving your home. Read the FAQ section, check the lender’s reputation, visit lending forums online to get an idea on how to best approach the situation.

Apart from your regulation low-interest auto loans you can also consider using the equity in your property. A home equity loan and a HELOC both have low interest rates as compared to routine car loans. You may also be able to get tax deductions on the interest amount on these loans. If you are considering a loan for a shorter duration, say 36 months, then you should go for a HELOC as these have very low initial interest rates but the rate are variable.

Be careful if considering zero-interest loans as these invariably have a higher cost in the long term.

Finally, you may just want to lease a vehicle instead of owning it. Monthly lease payments are lower than monthly loan payments and you get to enjoy driving the vehicle. However, at the end of the lease you do not own the car.

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