Used Car Loans help us get ourselves on the road in the car we want. But are we getting the best deal? Check out CARFAX’s top tips!
If you are shopping for a car and need to finance some of the costs there are 5 ways you can obtain a car loan at the lowest possible interest rate and the best loan terms.
1. They say timing is everything!
Interest rates on car loans float up and down with prevailing economic conditions. Do some research on current rates and key indicators that can tell you if rates are going to be steady, rising or falling in the near term.
So if you are not in a super hurry to buy your car you might get a lower rate simply by waiting for the right time to take out a loan.
2. Know your credit score
Banks lend money at interest rates that match their level of risk – they use credit scores to determine that risk.
If you have a history of meeting all your financial obligations on time and you don’t carry too much debt in relation to your income you probably already have a high credit score. Keeping that credit score high will keep your interest rates low. Find out your score before you borrow for your next car.
3. The higher the down payment the lower the interest rate
This is called “Loan to Value” ratio.
That’s a fancy way of saying that the more money you put down the more secure a bank feels when lending you money. Typically, the more you put down, the lower your interest rate and your monthly payments.
4. Get a co-signer
When you’re a young person just starting out and haven’t established a positive credit record sometimes you have to help banks know you are not a high-risk borrower. That’s where a co-signer becomes necessary. Think of a co-signer as a referral from a friend or family member who is also willing to guarantee the bank that you are worthy borrower. Without a co-signer you may not get the loan at all or if you do the interest rate will be off the charts high making monthly payments that much tougher to maintain.
5. Shop ’til you drop
Banks are competitive and they make money by lending money. They really like auto loans because the car itself is collateral for the loan.
So shop around – make sure each banker you speak with knows that you’re comparing rates and terms at other banks. You’ll be delighted to find how much they want a customer like you and how willing they will be to offer you a great car loan.
More Financial Advice on Buying Cars:
How to Finance your First Used Car from a Dealership. Don’t finance or buy your First Car until you watch this. It will stop you from getting ripped off and put in debt. I feel a lot of people don’t understand how Crazy financing a used car is in a financial sense. The smart way to buy a Used Car from a dealership is by paying Cash upfront. If you’re a first time car buyer, or are planning to buy your first car any time soon, this video will help you out the most!
(READ The Rest of the Description For Detailed tips and Advice)
When you go to buy a car at a dealer, there are two main ways to buy a car. The first way is by paying cash for the car. When you pay cash for a car, they sign over the car tittle (pink slip) and the vehicle immediately becomes yours. The second way to buy a car is by financing it. For the most part people finance a car when they don’t have enough money to pay for the car at once.
People put a down payment on a car and borrow the rest of the money from either the dealer, a bank, or any other auto loan company.
I financed my car with the deanship. That is called in house financing. That is the dumbest way to finance a car because they will give you a high interest rate as you seen in the video when I showed the paper. Good thing I paid it off in one month.
The smart way to finance a car is by going to a bank like Chase and getting a per-approved auto loan. If the bank approves you for a loan, when you find the car you want at the dealer the bank will pay for the car, but you will be in debt to the bank and you will pay the bank the car payments.
The quickest way to stay poor is by going into debt for a car and then spending all of your money every month to pay the car note and insurance. Save yourself by just saving your money and buying a car you can afford. That means you can buy it all at once with cash.
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