How to Save Money on Your Car Loan

There are a few ways in which borrowers can lower payments, and save money on their car loans. One of the most popular methods to consider is using the equity (HELOC) in your home to lower payments when you are financing a car. Getting a home equity line of credit, and a home equity loan will get you lower rates on your car loan, due to the fact that your home is used as a form of collateral (your car is secured against the value of your home). Interest on a HELOC is also typically tax deductible, so you won't be paying it twice when tax time rolls around. A HELOC is a good option for car loans which are 36 months or less, due to the fact that the rates are variable. For more than 36 month car loans, consider a home equity loan instead, since it has a guaranteed rate for the entire duration.

You may also consider obtaining an independant financing company in order to save on your car loan. Finding an independant lender, before you decide on the purchase of your car, can really save you money, rather than going with dealer financing, which typically will charge you much higher rates. A dealer will sometimes ask consumers what amount they can afford for their monthly payment, this is a trap for them to hike up interest rates on you. So, before going in to the dealership, secure a personal loan company, and you will be guaranteed a lower interest rate, than if you decide to use the dealers lenders.

Zero interest loans are also a big trap, but can be your worst enemy (plus, very few consumers qualify for them due to their strict income requirements, and extremely high credit score requirements). But, if you do qualify, you must really consider whether or not it is in your best interest. These loans are usually for a very short period of time (24 months or less typically). So, the payments will be very high on a monthly basis. Plus, if you miss just one payment, you are really going to get hit hard with the back interest. So, before thinking you will save money here, really consider taking a regular loan, because zero interest loans can be difficult to keep up with.

To save money, the best bet is to get your own lender, and use your home as equity. Don't use dealership lenders, and really shop around before you find the right lender to go with, offering you the best rates and repayment terms.