Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jul 20, 2021

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There are a few ways borrowers can lower their car loan rates.

Car loans can sometimes carry interest rates that turn into a financial burden for borrowers even if borrowers have steady incomes and low debt. Then, for those in financial distress, some interest rates make auto payments downright unmanageable. Fortunately, borrowers can refinance their auto loans for a chance at lowering their car loan rates.

Refinancing allows borrowers to negotiate for a lower interest rate which can save them money in the long term. When a refinance occurs, borrowers close their current financing and switch to a new car loan that has an accompanying new interest rate. Those new loan terms are often beneficial to borrowers.

Due to the inheritance of new terms, refinancing an auto loan can save a massive amount of money in due time.

When looking to lower their interest rates, prospective borrowers should broaden their search beyond their current lender by seeking out banks, loan companies, and credit unions that may offer competitive refinancing opportunities. Borrowers should compare car loan rates between the various companies and lenders they contact.

Prospective applicants should also seek to refinance their auto loan if their credit score improves since an improved credit score shows lenders that a borrower is a good investment. Better investments earn better car loan rates.

For those who don’t wish to refinance, they can still try to plead with their current lender. A borrower’s original lender set their car loan rate and, consequently, can adjust it after-the-fact (if willing, of course). Lenders typically have requirements that must be met in order to reduce an already-assigned interest rate. Some of those requirements might include proving unexpected financial hardship and providing notice of competing lenders’ interest rate offers.

Timing can also play an important role for borrowers seeking to lower their car loan rates. Sometimes the best time to negotiate for a lower auto loan rate is when the government lowers interest rates.

As with almost any refinancing, borrowers should be on the lookout for exorbitant fees. These are a clear sign of fraudulent and unethical lenders. Even if borrowers have bad credit, they should be cautious about predatory lenders taking advantage of their potential desperation.

If borrowers are unable to refinance or reduce their car loan rates, they may find it best to create a new budget that will allow them to make the necessary car loan payments.