The best way to get the best auto loan rate is to shop around. Taking your credit score and your financial situation into consideration is important to getting the best deal. It also helps to consider purchasing from a private seller or to refinance your existing car loan.
There are a number of ways to find the best auto loan rate for your needs, including a little old-fashioned legwork and the use of your smartphone to tap into the big boy’s network. For instance, you can go to your local credit union and see what promotional deals they have on the books. It’s also worth checking out your local car dealership for their financing options as well.
Using the aforementioned techniques, you should have no trouble finding the best auto loan rate for your situation. Several lenders offer similar incentives, but you’ll want to find one that’s the right fit for you. Depending on your credit score and loan requirements, you may not qualify for the best rates available. If so, you can either choose to shop around for the best rates, or get preapproved for a loan before visiting the dealership.
The real nitty gritty is to figure out if you can afford to pay off the debt in full and on time. Some lenders will reward you for paying off your loan in full in the form of lower interest rates.
Auto loan refinancing can lower your monthly payments and save you money in interest. However, it is important to choose the right lender. You may not qualify for a lower rate if you have spotty credit or if you are in a financial crisis. In addition, you should consider if the new lender will pay off your old loan.
A better auto loan rate can save you hundreds of dollars in interest over the life of your loan. For example, if you had a $15,000 loan at 7% interest, and you refinanced at 5%, you would save about $800 in interest. This means that you can pay off your current loan faster and make a lower monthly payment.
If you are considering an auto loan refinance, consider how you can use your car’s equity. Some lenders offer discounts if you have a co-signer or if you enroll in autopay.
Consider your credit score
Your credit score is a significant factor in determining your auto loan interest rate. Lenders typically group borrowers into categories based on their credit scores. The higher your credit score, the lower your interest rate.
There are three major types of credit scores. First is the subprime category, which is for borrowers who have less than perfect credit. These borrowers can get approved for car loans, but they pay more than borrowers in the better credit category.
Next is the prime category, which is for borrowers with excellent credit. Applicants with these types of scores can secure very low APRs. Borrowers with good credit will also have easier time making their payments.
Finally, there is the deep subprime category, which is for a borrower with less than ideal credit. This borrower will generally have trouble getting a car loan at all. Getting approved requires a credit score of 500 or more. However, these borrowers can qualify for auto loans with a low interest rate.
Consider buying from a private seller
If you are looking to buy a new or used car, it pays to consider buying from a private seller. Private sellers are often willing to offer lower prices than dealerships, and they have the advantage of avoiding dealer markups. However, there are a few caveats.
The most obvious one is that you will need to come up with some cash to make the purchase. Some lenders will require more than others. For example, a bank may require a larger down payment, and your credit score may need a little work. You may need to borrow the money from friends or family.
There are some benefits to buying from a private seller, but you should do your homework before you buy. Not only should you find out what you’re paying for, but you should also find out how well the seller takes care of the vehicle. A quick look at the car’s history will tell you how it was treated.