The best auto loans can be found with the oldest advice.

Many people buy their auto loans in the same place they buy their car. But while it may be convenient, it’s unlikely to be the best deal. The secret to finding the best auto loan isn’t having a high credit score: It’s the most common sense shopping advice you’ll find, to shop around before you buy. This will not only help you save money, it’ll help you save time and aggravation.

Due Diligence

We often forget that just like a bag of chips or a bottle of soda, an auto loan is a product. And like any product, there’s a lot of people offering it at very different prices, depending on a number of factors. This is why shopping around is so important, as there could be a far better loan for you depending on where you shop.

Any auto loan breaks down to three different parts. The first is the principal, or how much you can borrow overall from a particular financial institution. The second is the loan term, or how long you’ll make payments on the loan, usually written in months. The term is important because the longer the term, the more overall payments you have to make, and this can lower your monthly payment. And finally there’s the interest rate, the overall price you’ll pay on the principal to get the loan.

To save the most money, ideally all three are as low as you can get them. Keep in mind these are all interlocking parts; if, for example, you have two quotes that offer you the same principal and interest rate, but one has a longer term, the shorter term will save you money. Why? Because the longer your loan goes, the more interest you pay. If you need a lower payment, it might make sense to see if you can bargain down the interest rate. But where should you buy?

Before you get an auto loan, be sure to do the math.

Getting Quotes

The good news is the auto loan industry has absolutely exploded over the last few years. Banks, credit unions, and alternative lenders have all gotten into the market, thanks in part to low default rates and cars holding their value well. So it’s really a question of finding the right quotes.

Some may be concerned about their credit scores, but there are lenders for all levels of credit, and a low score makes shopping around even more important. How lenders approach credit scores can vary widely, and one lender may offer a far better deal or be willing to work with you more closely than others.

But it all starts with the quotes. There are dozens of websites out there that will allow you to collect a bunch of quotes to look at for the best deal. Simply get the quotes, look at the factors and pick the institution that best aligns with your needs.

And don’t forget, this cuts down on the negotiation. If you’ve already got the financing, all the dealership needs is to meet your needs with the car. If you’re currently shopping for a car, we’ll help you find the right one: search new vehicles now.