When it’s time to go car shopping, fixed rate loans are an ideal way to finance your purchase. After all, it’s the interest rate on the loan that determines your monthly payment, and a difference of just a few percentage points can mean that you end up paying thousands of dollars more for your vehicle than you needed to. There are low-interest fixed rate loans available, and many times they’re offered by the dealer’s preferred lender. Here are a few tips to help you find low rates on a fixed loan.
Now is a good time to take advantage of lender competition. To increase your chances of getting the best auto loan rates, you should get quotes from different lenders and car dealerships. Once the lenders learn that you are shopping around, it’s more likely that they’ll offer you a reduced rate. The easiest way to compare loan rates is to go online. You’ll find many online lenders that can have you approved in minutes. Pre-approval of a car loan gives you more bargaining power with the dealer.
Usually, you’ll find the best car loan terms on vehicles that aren’t in high demand. If a particular car is really popular, it will be harder to get a loan to buy one. If you do get a loan, it will be at a much higher interest rate. For example, in the summertime, convertibles are in great demand, so the loan rates are higher. If you wait until winter to buy the same car, you have a greater chance of getting a car loan to buy it.
With new models coming out earlier now, late summer and early autum are the best times of year to shop for a car. It’s easier to get a low fixed rate car loan then, provided the loan is for a car from the previous model year. Dealers want to make room for the new model lines, so they’re ready to deal on last year’s cars. Incentives and lower interest rates provide motivation for customers to buy the older models.
Just as lenders are ready to compete for your attention, car makers do the same thing. When one car manufacturer offers 0% financing, the other makers usually do the same thing not long after. That’s good news for car buyers. Make the most of the competition between the manufacturers, and you’ll save thousands on your new car. However, 0% financing is usually reserved for those with stellar credit, and the loans come with shorter terms. You can even negotiate for a lower interest rate, just as you can haggle on the car’s price. If you can pay the loan off quickly, it’s a great deal.
Your chances of getting a low rate car loan depend on your credit rating. A good credit rating is one of the most important financial assets you will ever have, and staying current on your loans and other accounts goes a long way toward maintaining your good credit. With good credit, a little luck, and the information above, you’re much more likely to get good car loan terms.