If you’re looking to save money with a low monthly car payment, your auto financing rate is one of the biggest factors. This is true whether you lease or buy a car. No one wants to get a bad deal on their next car loan, so we’re here to help you understand how to get the best rate and the lowest monthly payment.

Explore these personal finance insights that focus on how to get a low auto financing rate.

There are many actions you can take to get a low car payment. These include knowing (and improving) your credit score, getting pre-approved, making a down payment, and having reasonable expectations.

Know your credit score

The most important factor in determining your financing rate is your credit score. Before you decide to purchase or lease you should check your credit score. This will give you an idea of what “tier” you fall into in the lender’s eyes. The higher your credit score, the better your rate, and the lower your payment. If your credit score is lower than you’d like it to be, take the necessary steps to improve your credit score. Those with credit scores above 660 will get the best deals, especially if your credit score is above 780. But, if you’re credit score is not high, keep reading to find out the other methods available to ensure you get a reasonable rate.

Get pre-approved for your car payment

Before you step foot into the dealership, you should have an idea of what financing you will be approved for. The easiest way to do this is to get a pre-approval. You can get a pre-approval online from the dealership you want to use beforehand. Pre-approvals are available for both auto leasing and buying. If you are purchasing a vehicle you may want to shop around online first. Sites like LendingTree will allow you to compare rates in minutes. Chances are the dealership will meet or even give you a better deal if you’re armed with that pre-approval.

Consider a down payment

The amount of your down payment can affect your financing terms, as well. Consider whether putting more money down will cause you to pay less in the long run. Assuming you have the cash available, it may be wise to put down a larger amount, and therefore finance less. If you are buying a car, try to put down at least 10% – this amount should help you be viewed as less risky in the lender’s eyes. If you are trading in an older car, then the trade-in price will be considered your down payment. This is true whether you are leasing or buying.

Have reasonable expectations

It can be tempting to buy or lease that new luxury car you’ve been eyeing. But stay financially responsible and don’t get in over your head with your monthly car payment. The advertisements that you see online or in the paper typically show prices for the most credit-worthy borrowers. Unless your credit is near-perfect, prepare to pay more than the advertised price or interest rate. Don’t go overboard with costly features either. Extras such as heated seats and TV screens can add thousands of dollars to the purchase price. Before you sign on the dotted line, review the exact monthly payment amount.

Know how to navigate your auto finance to get a low car payment

You car payment, plus insurance and maintenance, may be one of your highest monthly expenses. Don’t let your car payment wreck havoc on your budget. Make sure you are getting the best deal possible when buying or leasing an auto. Finally, you may also wish to consult with a knowledgeable financial planner who can help advise you how much you should be spending each month on your car payment.

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