Purchasing a new-to-you vehicle is a big deal. If you’re like me, a vehicle is likely to be one of your biggest monthly expenses. Keeping the cost down is a wise way to save cash that you can apply elsewhere in your monthly budget. Before buying my new car, I did some research and found savvy ways to save money on a car loan.

Shop Around

When shopping for a car, I knew the exact model, make, and color of the vehicle I wanted. But, a smart friend told me to have an open mind and look for cars that were approximately the same size and to test drive several. I wound up getting a gorgeous car that was several thousand dollars less than the one I originally coveted!

Also, search for cars at different locations. One part of town may have lower prices than the other, and costs can vary greatly at different dealerships.

Search for Low Interest Rates

I assumed that the dealership where I found the car I wanted to buy would have the best interest rates, but when I heard what they were offering I decided to check banks and credit unions in the area. Banks and other financial institutions are highly competitive and searching for the best rates can save you a bundle of money each month. Credit unions typically offer the lowest interest rates that will help your save money on a car loan.

Another excellent tip I learned was that it’s wise to put off financing a car for 6 months or even a couple of years if that’s what it takes to get your credit score higher. Fortunately, I had a very high credit score and was able to save a couple hundred dollars on my car payment compared to a friend who bought a similarly priced car and who had a poor credit score.

Have a Down Payment

Putting money down on a vehicle helped reduce my monthly loan payment because it meant I had less to finance. This also helped me save money on a car loan because I could pay off it in a shorter amount of time, thus saving me interest.

Choose Bi-Monthly Payments

I had the option of making payments every two weeks instead of once a month and I jumped on it. This meant that I made 13 full payments each year versus 12 once-a-month payments. I saved interest and was able to pay off my car more quickly.

Buying a new-to-you car is an exciting experience, but don’t let your emotions rule. Saving money on the loan payments allows you to get out of debt sooner, and have more cash to spend on other necessities!