How to lower APR on a car loan


6 tips for getting a low rate and boosting your chances to save

Lowering the annual percentage rate (APR) on a car loan is one of the best ways to save on vehicle financing and the total cost of buying a car.

And it’s not complicated – there are simple ways to approach it.

Here are six tips for dropping the APR on an auto loan.

1. Check your credit reports, and consider building credit

Whether you want to save cash on financing for your existing car or look for a low interest rate and APR to buy your next vehicle, checking your credit position and building credit may help you get started.

You can review your credit history in credit reports, compiled by the three major credit reporting agencies, for free once a year. Check for errors and inaccuracies that might harm your credit score.

That’s important because a higher credit score usually makes it easier to qualify for a loan and may result in a better interest rate, says the Consumer Financial Protection Bureau (CFPB).

There are no hard-and-fast rules to building credit, but the CFPB offers these tips: pay your bills on time, every time; don’t get close to your credit limit; a long credit history helps your score; and only apply for the credit you need.

2. Apply for auto refinancing

This is a popular and straightforward way to potentially lower APR when you already have a car loan. Auto refinancing works by applying for a new lender to pay off your existing loan and replace it with a new one with agreed upon terms, like a reduced APR and a longer or shorter loan term, for example.

If you qualify for refinancing with an APR one percentage point below your existing rate, you could make a decent saving.

3. Add an auto loan cosigner

When buying a vehicle, a creditworthy cosigner may strengthen your loan application, particularly if you have bad credit.* The CFPB states that, “a cosigner with good or excellent credit could significantly lower your interest rate.” A co-borrower enters in to the loan contract and is required to make any missed payments or pay back the loan if the borrower fails to do so.

4. Shop around for financing

Shopping around for an auto loan or refinancing lets you compare rates and terms, and may also drop your APR. Consider searching for financing online and try direct-to-consumer lenders, like RoadLoans, offering a streamlined process with instant decisions.

5. Think about shorter loan terms

Longer loan terms often have higher interest rates, according to Consumer Reports, so a shorter term may be another route to a lower APR on your car loan. Keep in mind a shorter loan might have a higher monthly payment than a lengthier one where the loan amount is spread over a greater period. But a shorter term means you’ll pay interest over a shorter period, of course, which may also reduce what you’ll pay for the car in total.

6. Negotiate APR and interest rate

Did you know APR and interest rate are two factors that are typically negotiable on an auto loan? Negotiating lower rates with a lender is another way for approved applicants to potentially save money.

Take control, save time and hassle

Whether you’re looking to reduce what you’re paying on your current car or want to get the best possible financing terms on your next one, knowing how to get a lower APR on a car loan gives you more control in the shopping process.

RoadLoans accepts applications for car loans and auto refinancing from consumers with all types of credit and offers approved applicants a fast and easy financing process. We don’t, however, accept applications to refinance loans from existing Santander Consumer USA and Chrysler Capital customers.

Apply for auto financing with RoadLoans to get an instant decision.


* “Bad” or “poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press),,, Investopedia, and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by and Santander Consumer USA.


Written by:

Competitive Rates

Lower your monthly car payments by applying for a car loan with

Apply for a Loan

*View disclosures & offer information