Best Car Loan Interest Rates: How To Get Them
Car loan interest rates can vary greatly. If you are worried about paying very high interest rates, then you will be happy to know that there are a number of things that you can do to lower them. Below are some tips for getting the best car loan interest rates:
Check Your Credit
Your credit score is one of the factors that determines your interest rates. If you have a good credit score, then you will most likely get better interest rates. Make sure that all of the information on your credit report is correct. Many people have a low credit score due to errors on their credit report.
If your credit score is not as high as it should be, then you should take some time to work on it before you apply for a car loan. You can improve your credit score by reducing some of your debt. You should also pay your bills on time.
People with very high credit scores may qualify for 0 percent financing. However, only 15 percent of people in America qualify for this.
Consider Buying A New Vehicle
Many people today are purchasing older vehicles so that they can save money. Used cars usually cost a fraction of the price that newer vehicles cost. However, you may want to consider purchasing a new vehicle if it is within your budget. The interest rates on newer vehicles are typically lower.
The Length Of Your Car Loan
Generally speaking, the longer your car loan is, the more you can expect to pay in interest. The average term for a car loan today is 60 months or five years. If you take out a loan for longer than five years, then you can expect to pay considerably higher interest rates. That is why you should sign up for the shortest term that you can afford.
Consider Getting Outside Financing
If your credit score is decent, then you may be able to get pre-approved for a loan from your credit union or bank. You can compare this financing to the offer from the dealer financing. You should only take the dealer offer if you will be able to get a better rate.
What To Do If You Are Rejected
If your application is rejected, then you will need to take the time to figure out why it was rejected. Address those issues and then apply for a loan again.
There are several things that you can do to get the best interest rates on your car loan. You should check your credit, consider buying a new car and get the shortest loan length that you can afford. It is also a good idea to consider getting outside financing.