When buying a used car, most consumers will also apply for a used car loan. Used car loans make it easier to afford such a large purchase by setting up the payment over equal monthly installments for the next few years. The interest rate on your car loan will directly affect how affordable your loan payments are as well as how easy it is to pay off the loan balance. With this in mind, you may be wondering how you can get the best used car loan rates. By following these easy tips, you can more successfully get a great rate on your car loan.
Understand and Improve Your Credit Rating
One of the most significant factors that will affect your car loan rate is your credit rating. Applicants with a good to excellent credit rating may qualify for a significantly lower rate than applicants with a lower credit rating will qualify for. This means that you have a great deal of control over your used car loan interest rate. Take time to review your current credit rating. If you notice anything that is not correct, follow the appropriate steps to report an error to the credit bureaus and to your creditors. If possible and necessary, spend time improving your credit rating before you apply.
Shop for Low Rates Online
When you are ready to get started shopping for a low interest rate, it may be best to start this process online. Car dealerships also offer in-house financing, and it is great to get quotes from the dealership as well. However, if you have located the best online rate available when you apply for your loan through the dealership, your rate in hand will be one for the dealership to beat. This ensures that you get the lowest interest rate possible on your used car loan.
Compare Rates and Fees
The overall cost of a used car loan is determined by the both the interest rate and the fees. Some lenders will add on extra fees in order to essentially buy down the interest rate. This may make these loans look more attractive to rate shoppers, but the added fees may make them more expensive overall. When you are focusing on interest rates, also pay attention to the total lender fees to find the best deal on your used car loan.
A used car loan payment will impact your monthly budget for several years in most cases. Therefore, it is wise to set up payments that are affordable for your budget. While your primary goal may be to find the best quote possible on your used car loan, you should take the final step of comparing that loan payment against your budget to ensure that you can afford to comfortably make the payment in the years to come. When you follow each of these important steps, you can more easily get a low interest rate and car loan payment that is affordable for your budget.