Are you in the market for a new car? I’m sure you agree that it is exciting but also confusing times with all the different figures floating around in your head. From the number of horsepowers that model has, to the gas per liter, how many seats, to of course the price.
One detail that some people seem to not focus on is the interest rate of the loan. Everyone is so focused on negotiating the sales price that they forget that the interest rate needs to come into the equation when buying a new car. If the interest rate is too high any money that you saved during the sale will down the gurgler.
A low auto loan rate will keep your new car affordable and increase purchasing power.
Are you’re ready to buy a new car? Here are four tips for getting a great auto loan rate.
1. Go New (Brand New)
Depending on if you choose a brand new car or a used car will influence your auto loan rate. Loans for new vehicles always offer a lower rate than auto loan rates for used cars. Therefore there is a saving that you can receive on the auto loan rate if you decide to buy a new car instead of a used one. It is worth comparing because the difference in the rate may help you choose between purchasing a new or used car.
2. Go Short
The length of the term of the auto loan rate will affect the affordability of the payments. The shorter the period of the loan will ensure that you pay off the loan quicker and with less interest. A five-year auto loan is a common term that most people can afford. If you decide on a longer term than you are more than likely to get a higher rate which means that you will be paying more interest and for a more extended period.
- Check Your Credit
Ensuring that you have no hidden surprises when the lenders check your credit will put you in an excellent position to receiving a great auto loan rate. Unfortunately, if your credit score is low, then you will not be offered a competitive interest loan rate. Some lenders do offer ‘fresh start’ loans however they are established with a hefty price tag for those people trying to build or reestablish their credit.
- Shop Around
A car dealership will offer you auto loan rates that can sometimes not be as competitive as other lenders or banks. Therefore it is a great idea to shop around before purchasing a car. Ensuring that you have the best interest rate on the market will allow you to be confident when making your decision on your new vehicle.