Getting a car loan can be exciting, but it’s important to avoid some common mistakes that could make your car loan interest rate higher than necessary. Whether you're using a traditional lender or loan apps, understanding these pitfalls will help you save money.

1. Skipping Research on Lenders and Rates

One of the biggest mistakes is not researching lenders before choosing one. Banks, credit unions, and loan apps all offer car loans, but their rates and terms can vary widely. When you don’t compare options, you might end up with a higher car loan interest rate. Spend time comparing several lenders to find a competitive rate. This can be especially important if you’re looking for a used car loan interest rate, as these can be slightly higher than new car loan rates.

2. Having a Low Credit Score

Your credit score plays a huge role in determining your car loan interest rate. The lower your credit score, the higher the rate lenders are likely to offer. If you have a poor credit score, lenders may view you as a higher risk, resulting in a more expensive loan. If you can, work on improving your credit score before applying for a loan. Small improvements, such as paying down outstanding debts and making on-time payments, can make a big difference.