Who doesn’t want to get the best car loan interest rate? But how do you do it? Some simple tips can help you save a bundle when you make your car payment every month. Check them out below. And if you are ready to apply for a low-interest rate car loan, this company can help.
Know Your Credit Score Before You Shop
If there is ever a good time to check and track your credit score, it’s when you want to get a new car. Unlike a credit card or mortgage, you can usually get an auto loan; you’ll just pay a lot more if you have bad credit.
Why? Because repossessing a car is a simple thing for most banks. They know they can get the vehicle back and resell it, so it’s usually worth the risk.
But if your credit is average, you may be thrilled even to get a loan, so you could hesitate to ask if they can do any better. Dealers know this psychology, and they rake in cash because of it.
You can use Credit Karma to know your credit score, so you know the kinds of loans you can get.
If you have good credit in the 700s, you can get a reasonable rate. But if your credit is 650 or lower, you could have a rate of 10%.
With a lower score, shop around with various financing companies because you could get a lower rate than you think.
Get Financing Quotes Before You Shop
If you have excellent credit, you can usually get outstanding financing rates at the dealership. But if your credit is well below 700, you may want to try several online lenders. You will get an offer with a specific interest rate and how much the car can cost.
You don’t have to choose this loan if the dealer gets you a better financing deal. But you can go through the door and know that you have a rate you want the dealer to beat.
A good bet is to try local banks and credit unions if you have average credit because sometimes you can get lower rates there.
Keep It Short Term
Shorter-term car loans have lower rates and higher payments. But this is preferable.
When you go to a dealership and say you need to finance a car, the salesperson will attempt to negotiate based on payment. By doing that, the rep can draw you in by showing how much lower he can make the payment with a longer loan term, but NOT by lowering the price of the car.
So, if you extend the term another year, a $475 payment could be $350. But you’ll pay more for the car because you pay more interest. The best thing to do is to get a three-year car loan so you can get it paid off fast and at a lower rate.
Put Down At Least 20%
You can avoid a nasty situation where you owe more than the car is worth by putting at least 20% down. This may seem obvious, but many dealerships often don’t require people with average credit to put down anything.
Driving away in a new car with no money down is a nice thought, but there’s a risk. If you need to sell the car in three months, you could owe more than the car is worth.
Following these simple car financing strategies can help ensure that you will walk away with the best interest rate and pay the least for the car over time that you can.