Learning how auto loans work can reduce your interest rate over the life of a typical car loan. You’ve got your eye on that shiny new Lexus – okay, maybe it’s a Kia, but it’s perfect and you want it to be yours, all yours – as soon as possible. At the same time, you certainly don’t want to be saddled with paying nearly double the car’s value by the time you finish paying off the car loan. Here are five tips to help you get the best possible interest rate on an auto loan to put the car of your dreams in your driveway.
1. Check your credit rating
If you don’t already know what’s in your credit report, this is a good time to find out. Before you apply for an auto loan, get a copy of your credit report to find out what surprises may be lurking. You may find out that your report contains erroneous information that should be corrected, or that there’s something negative on it that can be either explained away or fixed easily with a couple of phone calls or letters. Either way, it always helps to know what the credit reporting agencies are saying about you before you start shopping around for a loan.
2. If you have good to excellent credit
you may qualify for special incentive financing available through the car dealer. If the car dealer is offering a low, low finance rate, check all the terms and conditions carefully before you go car shopping. You can check your credit scores online to make sure that you qualify. Most often, that 1% financing rate is reserved for those who have excellent credit and can afford to do a 12 month financing plan. If that’s you – then grab the deal. 1-2% financing is a bargain if you can handle the other terms and conditions attached.
3. If you need a longer term than 12 months or have spotty credit
Arrange your financing yourself before setting foot on the car lot. Check with your usual bank for a new auto loan first, as they may have better interest rates for those who are already established customers, or who carry all their savings, checking and loan accounts through one bank. It may save you a few percentage points in interest to do business with someone who already knows you.
4. Shop online for the best auto loan available
At many online credit web sites, you can submit a request for multiple quotes from area finance agencies and lending firms. Simply submit your request for an auto loan quote through an online form, and the web site will submit it to up to four financing firms at once. A representative from each agency will contact you within a few hours to a day or two to discuss your request with you and give you a quote for an interest rate and monthly payment amount that they can offer you. Online shopping for credit makes it easy to compare and pick the best auto loan terms for you.
5. If your credit is bad but you need that car
One of your best and most often overlooked options is to find someone to cosign the loan for you. In most cases, when you have a cosigner, you’ll get the interest rate that THEY qualify for, which means a lower monthly payment for you.
So if you want to get the best auto loan rates, you need to pay close attention to your credit history and guard it very carefully. If you review your current credit history every three months or so you should be able to stay up on any changes that will need to be made and can keep errors to a minimum. Then when you are ready to start shopping for used car auto loans you can get the best auto loan rates that are available and save lots of money.
We recommend Auto Credit Express as a leader in the industry and helping people get financing everyday.
Here is a Video that explains Auto Credit and how it works.