A down payment and a good credit score can net you a great deal when it comes to auto financing these days.

For borrowers with anything less than sterling credit, show up with a sizable down payment.

 

“Real money always helps. It gets the attention of the finance director at the dealership and it gets the attention of the lender — we can’t ignore that,” says Bill Vogeney, senior vice president and chief lending officer with Ent Federal Credit Union in Colorado. “Any kind of investment, anyone who has money to put down on their car, it certainly helps.”

Find out where you stand on the credit spectrum by ordering your credit report a few months before shopping. If the prospect seems intimidating, read this Bankrate feature about
what to look for on your credit report. Doing it in advance will give you plenty of time to correct any errors as well as pay down debts that may be stretching your debt-to-credit ratio and pulling down your score.

Next, decide how much you can reasonably spend on a car over a practical number of months. Just because 72-month car loans exist doesn’t mean that getting one is a good idea. Use this
calculator to determine your ideal monthly payment.

Use this Bankrate
calculator to find out how much you could save over the life of the loan with a larger initial investment.

Once you know how much you can spend, start shopping for a loan. Online lenders are a good place to start, but be sure to check locally as well.

Credit unions, banks or even the dealership may be able to offer you a better deal.

Take-away
Many people neglect to shop for their loans when buying a car. Consider, however, that while several percentage points on a loan won’t get you any upgrades, it will lower your monthly payment enough to have a little bit left over to use for other expenses.

For instance, on a four-year $15,000 loan with no money down, an 8 percent interest rate comes out to a monthly payment of $366.19. Compare that to the $338.69 monthly payment charged on a loan with a 4 percent interest rate. That’s about $1,320 over the life of the loan.

Combine low-priced financing with smart negotiating at the dealership and your savings will add up.