How to Lower Your Car Loan Interest Rate

Refinancing your auto loan can save you hundreds of dollars.

Refinancing your auto loan can save you hundreds of dollars.

While you may be enjoying your new car, you probably don’t love your interest rate. Many young car buyers get sucked in by deals that often sound too good to be true, and end up stuck with a higher-than-ideal interest rate. Lowering the interest rate on your vehicle is possible, and it can save you a considerable amount of money over the life of your loan.

Pull your credit report from each of the three major credit bureaus. Equifax, TransUnsion, and Experian all gather information about your financial history and transactions, and assign you a credit score. This score is the indicator most lenders use to determine the interest rate they’ll offer you on a loan: the higher your credit score, the lower your interest rate.

Clean up your credit score. Even a small bill that’s more than 30 days late is enough to drop your score by a few points. If you have past due payments or outstanding debts on your credit, pay them off prior to refinancing. Ask for a receipt for each obligation you pay, and check your credit history again in 45 to 60 days to make sure the obligations are marked as paid.

Shop around to determine what the going interest rate is for your vehicle and credit score. Request car loan quotes from a minimum of three independent financial institutions and compare the rates. The quotes will give you the new interest rate, projected payment, and length of the loan term.

Contact your existing loan holder and ask them to lower your interest rate. If they deny your request, explain to the agent that you’ve received a number of lower rate offers from other companies, and ask if they’re willing to beat the lowest offer to keep your business.

Choose the loan that offers you the lowest interest rate and most acceptable payment terms. If it’s your existing loan company, ask for the new loan terms in writing and sign the new loan obligation. If you’re changing companies, schedule an appointment with the new loan officer to complete your refinance.


  • Don’t allow too many companies to run your credit. Each time your credit is pulled and a purchase or loan is not made, it can lower your score.

About the Author

Louise Lawson has been a published author and editor for more than 10 years. Lawson specializes in pet and food-related articles, utilizing her 15 years as a sous chef and as a dog breeder, handler and trainer to produce pieces for online and print publications.

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