Not everyone has cash to buy a car outright. If looking to finance your next automobile, consider ways to get a good deal on your auto loan and the best interest rate possible. The rate determines the monthly payment on your car loan. Acquiring a high rate can reduce buying power and increase payments.
Know Your Credit
Auto lenders do offer bad credit loans to people who're looking to establish a credit history. But if looking for the best finance rate on your auto loan, it's best to establish credit first and maintain a good credit rating to qualify for competitive rates. Review your credit report and order your credit score. And if there's any negative information on your report like late payments and judgments, work with creditors to pay off these delinquencies and get the remarks deleted from your report.
Auto Loan Term
Another method for getting a better interest rate on your auto loan involves paying off the loan in two, three or four years. Five years is a typical term for auto loans. However, banks will offer an interest rate reduction with a reduced term. Check your finances to see if you can afford a higher payment.
Banks and Credit Unions
Using your dealer's financing is quick and convenient. But if you want a good finance deal, don't rush the loan and take time to shop around for the best interest rate on the auto loan. Once you find a vehicle and know the sale price, contact your personal bank or credit union for a loan quote. These institutions often charge less interest, which equals lower monthly payments.
Down Payments and Co-signers
Down payments and co-signers aren't required when financing a car. But if you want a better rate, or if you don't have a strong credit history, putting money down on the car loan or asking someone to co-sign the loan documents can help you get inside a new or used automobile. Down payments vary--aim for 10 to 20 percent down.
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