A car loan is a big financial investment, so it’s understandable to want to lower the costs involved as much as possible.
Interest rates can have a significant impact on your total car loan costs, and finding the best interest rate you can, may help you save a lot of money in the long run.
Here are some tips to help find the best interest rates on your car loan.
Research is key
To find the best interest rates for your car loan, you need to do your research and compare interest rates offered by various lenders and dealers. This will help you understand what you may be able to ask for and get when applying for your loan.
When comparing rates, always look at the comparison rate rather than looking solely at the advertised rates. The comparison is the total rate of interest you’ll pay, but also includes the loan amount and any fees and charges involved with your loan. It gives you a more accurate rate than what is advertised.
A car finance calculator can help you get an idea of the cost of a car loan, including the interest rate. A helpful tool before applying for a car loan, a car finance calculator provides a guide for the rates you can expect and how much your repayment amounts may be.
While it can be a lengthy process, it is worth taking your time to get the best rates you can. If you want to make the process quicker, you can work with a finance specialist, who can find the best rates for you.
There may be some limitations, but in many cases, you may be able to negotiate the terms of a car loan with lenders and dealers. It’s always worth asking if you can get a better rate.
Factors that impact interest rates
When considering you for a loan, a lender will look at a number of factors including your financial situation and your credit score. Lenders want to know you’ll be able to pay back your loan, so you’ll need evidence that you can keep up with loan repayments.
The interest rates you get will be impacted by your credit score. Your credit score gives lenders an indication of how reliable you may be in paying back your loan. If you have bad credit, car finance is still an option, however, you’re likely to pay higher interest rates.
Interest rates can be determined based on the amount borrowed and the loan term. The more you borrow, the higher the interest rate may be. The shorter the loan term, the faster it will be paid back. This can result in you getting a better interest rate.
The type of vehicle may also impact the interest rate. If it’s an older vehicle, it may have a higher interest rate.
Interest rates can also vary at different times of the year due to factors outside of your control, and will sometimes be higher than others.
Lowering the interest rate
While interest rates can be impacted by numerous factors, there are some ways to get a lower interest rate on your car loan.
Paying a larger amount upfront helps reduce the total amount of your loan, and can help you get a lower interest rate. If you borrow a larger amount and only make a small down payment a lender is more likely to view you as a risk, which will result in increased interest rates. Buying a cheaper vehicle also lowers your overall car loan amount, which in turn may help reduce your interest.
A shorter loan term may help you get a lower interest rate as there is less risk to the lender that you will default on your loan. Though keep in mind your repayment amounts may be higher for a shorter loan term.
If you don’t have a great credit score, you may want to spend time trying to improve it before applying for a loan to help you get a better interest rate. Improve your credit score by paying off debt and keeping up with bill and loan payments. Another option is to get a cosigner on your car loan. Your cosigner will make payments if you’re unable to, which reduces the risk to the lender.
If you’re unable to get a good interest rate on your car loan, you may be able to lower your interest rates down the track by refinancing your car loan. If your credit score has improved it may be worthwhile refinancing your loan, or interest rates may have dropped since you first applied for your car loan and you may be able to get a better rate on your loan.
Get help from a finance specialist
Getting the lowest interest rates you can, may help you save a lot of money, and often one of the easiest ways to get the best rates is to get expert help from a finance specialist.
A finance specialist can help you find the best rates for your car loan, taking a lot of stress out of the process. With a car finance finder, they can help you find the right loan option to suit your budget, so you get the vehicle you need as soon as possible.
360 Finance specialists have access to over 30 lenders and can get rates from different lenders so you don’t have to.
Contact the team at 360 Finance for all your vehicle financing needs.
