Fund Your Used Car: Auto Loan Tips for Getting Good Rates

There are numerous ways for you to ensure that you get a good rate on your used car auto loan. You will have to be creative, resourceful and spend some time educating yourself.

Having a good credit history is central to getting a good rate. With a low credit risk lender lenders are more likely to grant low interest rates. If your credit is bruised, you will need to take some steps to improve your credit score. Paying off some of your debts and increasing your savings account are excellent ways to improve your position. Showing a lender that you have a solid rainy day account can alleviate their fears in the event of a personal financial emergency.

Another method to secure a good loan rate is to have a decent down payment. If you have 10-20% available to put down you will have to borrow less and you can guarantee a low interest rate.

What Should you Consider When Looking for a Good Used Car Loan Rate?

Compare rates with numerous lenders. Check with local banks and credit unions. Historically, credit unions offer better rates than banks. Newspapers are a good starting place to compare interest rates locally. Online sources also will post many of the local resources as well as national and online lending institutions. If you are a homeowner, you should investigate the possibility of a home equity loan. You may be able to secure a favorable interest rate. In addition, there are tax incentives that could improve your bottom line. When researching your loan opportunities, take advantage of the online loan calculators. Many of these calculators permit you to plug in various loan scenarios and will assist you in finding the best loan rate.

Things That May Influence Your Interest Rate

Your credit score will be the primary factor that determines your interest rate. Prior to meeting with a prospective lender check your credit report and make sure that it is accurate. Look for any errors and take steps to correct them.

Dealer financing is always an option. If you have prepared yourself well, you can force the dealer to compete on your pre-approvals. However, most of the time the dealer is a middle-man and that can translate into high fees. Shorter term loans on used cars will always save you money. Determine how flexible the loan contract will be. Can you make additional payments without a penalty in the event of an early pay off?

 


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