5 Smart Tips to Negotiate Interest Rate on Your Auto Loan
To get the best rates on your auto loans, you need to understand the marketplace for rates including different options and assess your own financial situation.
This is the best way to get a good interest deal on your loan. Following, we are giving you some smart tips that will help you lower your interest rate.
#1 Lender
You can borrow an auto loan from banks, credit unions, and even automakers. Loans from any of these sources come from the dealer who works as a middleman and takes his cut.
Getting a loan through a dealer is not expensive, in fact, they often the best interest rate you will ever get. Dealers even offer zero percent financing.
Car dealers burrow money at the wholesale interest rate, which gets marked up before coming to you. This is why the dealer offers a low rate. The rate you get is no higher than the one arrange otherwise.
#2 New or Used
This doesn’t make a big difference in the interest rate of your auto loan. If you need to new, only new cars come for zero-percent financing.
However, there are some automakers who will offer a certified pre-owned car for zero percent. This means the older your car is, the higher interest rate you will get.
#3 Term Length
This is another deciding factor of your interest rate. You better sign up for the shortest term possible to keep your interest rate low. The fact is, a longer term means high-interest rate.
The average term for a new car is more than 60 months. This very term makes you willing to pay more than what the car is worth. This condition is named “Being Upside Down.”
#4 Rejected a Loan
What to do if you are rejected an auto loan? This is perhaps the most famous question when it comes to auto financing. Credit score plays an important role, so make sure you check it before applying for a loan.
If your credit score is good, you have improved it over the past months, and you agree to the lender’s terms, you can get your car. But you will have to pay a bit higher interest rate.
What we meant to say is, don’t lose heart if you have been rejected a loan. You can work around it, improve your credit score, and apply again for a better chance to get it. Lender’s need borrowers to keep their business running!
#5 Don’t Overlook Details
The biggest mistake you make when taking a loan is overlooking details. Your financial history is no hidden secret from the lender, make no mistake about it. Make sure you understand your terms and follow up with the details. In case you fail to meet any of the requirements, your deal will be canceled, and you may have your car repossessed by the bank.
So be careful when you are proceeding. Don’t make a silly mistake because it can cost you the whole deal. Double check your credit scores before making a move.
So what are you doing to negotiate a better deal when buying a new vehicle? I would love to hear your thoughts on this in the comments below.
Cheers!
