According to forecasts, auto loan rates will remain low at least until the end of the year. This is good news for those who are planning to make an auto purchase in the near future. If you are one of them, take advantage of low rates offered at present. Make sure you get the best auto loan rates by following these four tips:
Pick the right car
Getting a good rate begins with choosing the right vehicle for you. For most car shoppers, the choice boils down to either new or used. If you can afford to buy brand new, go for it. Used cars may cost less, but new cars come with better interest rates. While some certified pre-owned vehicles are offered at zero-percent, these are the exception. Typically, only new cars are qualified for zero-percent offers. Moreover, age brings more interest—the older the vehicle, the higher the rate.
Assess your needs and pick a car that meets them. Make sure your choice is one you can truly afford to pay.
Choose your lender wisely
Where you obtain financing greatly influences the kind of rate you will get, so choose wisely. Dealerships do not offer financing directly, but they make borrowing more convenient because they find the auto loan for you. Convenience comes with a price though, and this is why one must consider other lenders. Dealers are the only ones that can offer zero-percent financing, but note that not everyone qualifies for this offer. Shop around to find the right lender for you.
Start your comparison shopping by inquiring about the auto loan rates offered by local banks and credit unions, specifically those that you do business with. Traditional lenders like these offer competitive rates and terms. Credit unions in particular are known to give low rates; as a non-profit, they can afford to charge less in interest. Then, proceed with online banks, finance companies and other lenders like Portland Auto Approval Center.
Opt for a short loan term
The length of the term you choose also has an impact on your APR (annual percentage rate). These days, most buyers favor longer loan terms, usually to allow themselves to afford a more expensive vehicle. Extending your loan term does lower car payments, but it also increases the interest you will pay overall. Therefore, if you intend to spend less on interest, pick the shortest term you can manage. The ideal length is four years and below.
Maintain good credit
A surefire way to qualify for the best auto loan rates is to maintain good credit. Good to excellent credit is one’s ticket to get the best rates available. If your credit needs some work, repair it before you apply for an auto loan. You will be charged a hefty—and sometimes unreasonable—rate if you have bad credit.
Don’t assume you have good or bad credit, and never rely on lenders to tell you what your credit situation is. Know for sure where you stand with your credit and in turn, what you qualify for by getting a copy of your credit reports and paying for your credit scores.