May 1, 2017
Here Are Some Tips To Reduce The Interest Rate On A Car Loan
Other than buying a home, your second largest investment will be more than likely a car, now there are a few things we would like to go over with you, that could help to save you money in the long term so that your vehicle will not end up costing you more than it needs to.
If you are buying a used car from an auto dealership, you should know that they typically increase the base interest rate by 2 and a half points on average, which could end up costing you more than seven hundred dollars. So if you want to save some money by getting lower interest rates on your auto loan, you should first apply at your local bank or credit union to see what they have to offer as far as rates are concerned. Then you know how good a deal you will be getting from the car dealer. Credit unions and banks in most cases will have the lowest rates unless of course, you are buying a brand new car, then the dealers will be able to give you lower rates and in some cases 0% financing.
If you are shopping for your automobile at a larger dealership and not one of those small buy here pay car lots, then you can ask the salesperson about if there are any financing incentives available to you today from the manufacturers.
And even if you do decide to get the loan from the dealership, you should still ask them if that’s the best rate they can offer you, or what are your options to get a lower rate. Other than the price and age of the car, the other factors that affect your interest rate is the amount of your down payment and your creditworthiness. Remember, it never hurts to ask, all they can say in no.
Other things you may consider doing is reducing the term of the loan, but if you do this, you have to understand that while the rate will be lower, the payments will increase because you have less time to pay the loan off. But you will save a lot of money on interest with a shorter term loan. Some lenders also give rate discounts if you set up automatic payments.