• Auto Dealer Loans: How to Get the Best Rate

    If you are in the market for a new car, you most likely have been offered a variety of financing options, the least of which may not have been auto dealer loans. Auto dealer loans are offered by a car dealership itself, either through direct financing (if possible) or via a third party financier such as a bank or individual lender. Getting a car loan through a dealership is often easier than working with a bank, as the car dealer wants to sell you a car. Therefore, if the only way to do that is to help you with financing, it works to the dealer’s advantage to oblige. When getting a car loan, especially a car dealer loan, it’s important to try to get the best car loan rates available. There are a few practices that are essential when trying to get good car loan rates and if you master them, you will be well on your way to the best car loan deal possible!

    Follow these simple steps when trying to get the best car loan rates on any dealer loan:

    1. Know your credit score: Obtain a free credit report online and examine your credit score to assure all of the information is accurate. When applying for a car loan, this will be one of the first things that a lender will look at and you want to address any and all discrepancies ahead of time. Clearing up past due notices and taking care of any bad marks on your credit can go a long way when negotiating with a dealer for the best loan rate possible.
    2. Have a downpayment: Dealers are more likely to offer you good car loan rates if you bring a downpayment to closing. Downpayments work twofold for a consumer in that they decrease the risk the dealer is taking by lending you money to buy their product, and they act as a good faith payment which will help ease any doubts that the dealer may be having in working with you. A significant downpayment (1/3 to 1/2 the total amount for the car) can drastically reduce the interest rate you will be asked to pay over the course of the loan.
    3. Decrease your debt to income ratio: A third aspect of obtaining an auto loan will revolve around the amount of income you receive in respect to your current debt situation. Obviously a lender will not want offer you a great rate if you already have a large amount of debt and the likelihood of your defaulting on their loan in particular is significant. If possible, pay down some of your credit card debt or personal loan debt, prior to looking for a car loan. Simply having one less credit card to pay off can decrease your debt to income ratio dramatically, and land you a better car loan rate in no time.

    By utilizing these three simple steps, you can quickly and easily obtain the best car loan rates available from most car dealers.