There’s almost nothing more exciting than getting a new car, and quick auto loans make it easier to get the car you want in a hurry. The real challenge comes when it’s time to look for a loan. After all, the average person simply cannot afford to buy a new car outright. This guide will give you some strategies to ensure that you get the best car loan rates available.
Before you start applying for low rate auto loans, you should know where you stand as far as your credit is concerned. You should obtain copies of your credit reports from all three credit bureaus, and you are entitled to one free copy of each, per year. Simply visit annualcreditreport.com to get yours. We advise that you get your reports a couple of months before you apply for a loan, because it takes time to get inaccurate items removed. Those with good credit generally get auto loans at lower rates.
It’s also a good idea to have a budget in mind. Keep a tally of all your monthly bills and other expenses, so you’ll know about how much you can afford to spend for a car payment each month. When you know exactly how much you can spend, it’s far less likely that you’ll end up with a car loan you can’t afford to pay.
Take a look at the bigger picture. Most people, when they attempt to get an auto loan, focus only on how much they’ll be paying each month. While the monthly payment amount is an important consideration, there are other things you need to think about as well. For example, how long is the term on the loan? Its duration will not only determine how much you pay per month, it will also play a role in how much interest you’ll be paying. If you can, opt for a shorter-term loan (one or two years), because the interest rates will be much lower.
To get the best low rate auto loans, many lenders will require that you carry some kind of insurance. Now, we aren’t talking about auto insurance (though you’ll need that, too), but we are talking about life and/or disability insurance. By the lender’s logic, if something happens to you, you won’t be able to repay the loan. This kind of insurance reassures the lender that they’ll be paid, which results in lowered rates for you.
Shop around. You don’t have to go with the dealer’s in-house financing. Check with your local bank, credit union or online lender. In most cases, the financing offered by the dealer isn’t the best deal. By talking to different lenders, you will have a better idea of what a fair rate is. By having other offers in hand, you’ll have more leverage with the dealer.
Finding the right car can be confusing, but getting a quick auto loan doesn’t have to be. By following the tips we’ve just given, your loan experience will go a lot more smoothly, and you’ll get the car you need at a loan rate you can live with.