Car loans are one of the most popular ways to finance a new or used car, and with good reason. They offer a simple way to get the money you need to buy a car, and they typically have very competitive interest rates. But how do you make sure you’re getting the best possible car loan rate?
Here are a few tips:
Rates on car finance can vary quite a bit from lender to lender, so it pays to shop around and compare rates before you commit to a loan. You can use an online loan calculator to estimate what your payments would be at different interest rates.
Consider a shorter loan term
If you can swing it, paying off your loan in three years or less will save you a significant amount of money in interest charges. Of course, you’ll need to make higher monthly payments to do this, but it may be worth it in the long run, because you’ll pay less in total over the life of the loan.
Make a large down payment
The more money you can put down upfront, the lower your interest rate will be. This is because lenders see loans with larger down payments as less risky and therefore charge lower rates. It’s not necessary to put a deposit down on a brand new car, but if you’re buying a used car, try to save up as much money as possible.
Get pre-approved for a loan
If you know you want a certain car and you have your heart set on it, getting pre-approved for a car loan will give you a head start in the purchasing process. This is because dealerships will be more likely to give you a good deal on the car if they know you already have financing in place.
Have good credit
As with most things in life, having good credit will help you get better car loan rates. So if you’re planning on taking out a loan, be sure to check your credit score beforehand and take steps to improve your score if necessary. Before applying for any loans, it’s worth taking the time to check your credit score and history. If there are any errors on your credit file, you can dispute them with the credit bureau.
Do your research
One of the best ways to get a low interest rate on a car loan is to simply do your research. There are a number of online resources that can help you compare rates from different lenders, so take advantage of these tools. By shopping around and comparing rates, you’ll be in a much better position to get a good deal on your loan.
By following these tips, you should be able to get the best car loan rates possible. So before you go out and buy a new car, be sure to research your options and compare rates from different lenders. And remember, the better your credit score, the better your chances of getting a great car loan rate.