Shopping for an auto loan? Be sure to do your homework and learn how to haggle like a pro. In order to snag the best auto loan rate, you need to explore various financing options and know where you stand in the negotiating game. Here are a few steps you can take to nail the best deal on your auto loan.

Do some comparison shopping. Compare interest rates at various lending institutions, such as banks, thrifts, and credit unions, as well as the auto dealership. Consumer experts recommend that you get pre-approved on a loan before walking into the dealership, so you can keep financing arrangements out of your vehicle-price negotiations with the dealer. Additionally, check out prevailing car loan rates at online sites or newspapers to get an idea of the rates financial institutions are charging.

Determine the total cost of the loan. Aside from the annual percentage rate, the term or duration of the auto loan determines your monthly installment and the total purchase cost of the vehicle. The longer the term of the loan, the more you end up paying towards the interest, thereby raising the total cost of acquiring the vehicle. While a shorter-term loan with the same interest rate entails higher monthly payments, your total interest payment and vehicle purchase cost will be significantly less. Simply put, a three-year loan will cost you less than a five-year loan for the same amount on the same interest rate.

Consider shopping for an auto loan online. Don’t overlook online lenders when hunting for great auto loan deals. Some online lenders offer auto interest rates that are lower than the national average. To avail yourself of these rock-bottom rates, you must apply for the auto loan online and agree to automatic loan payments. Online loan shopping also gives you the convenience of being able to accomplish most loan application-related tasks, from requesting an interest rate lock-in to getting loan pre-approval, from the comfort of your home or office.

Know your credit score. Your credit rating affects your interest rate. Having a favorable credit score makes you a desirable, low-risk borrower, which translates to lower auto loan rates. Moreover, a sterling credit record could easily qualify you for zero-percent financing or low-interest-rate deals that many dealers are now offering. Knowing your credit score can also protect you from unscrupulous lenders who might want to charge you a rate that is higher than what you are qualified for. Get a copy of your credit report from Equifax, Experian, or Trans Union, to get a general idea of the interest rates that you may be eligible for.

Hone your negotiating skills. If you opt for dealer financing, be prepared to drive a hard bargain. Some sellers might try to combine the vehicle price and loan into one negotiation in an effort to confuse the buyer into paying more. You can avoid being duped into a false bargain by finalizing the price of the vehicle first before bringing up the subject of financing. Be an informed borrower. Check out prevailing auto loan rates and know your credit score to give yourself more bargaining power.