It’s hard enough finding the car of your dreams; it’s even tougher to figure out if you’re getting one of the best auto loan rates available for that dream car. But ensuring that you get the lowest interest rate out there can have a great impact on your overall financial health.
The trick is to figure out how to get the best car loan rates. Unfortunately, this isn’t an overnight process. The first step is to understand what factors impact the rate you finally get offered.
There are essentially three factors that come into play: credit history, the term of the loan and the loan-to-value of the vehicle.
1. Credit History
This is the big one. Credit history will have the largest impact on the rates you are offered. The best auto loan rates are advertised with good-credit borrowers in mind. Falling short of these standards will cause the rates you are eligible for to be much less appealing.
Despite what a lot of credit repair companies say, there is no quick fix to bruised or damaged credit histories, but you can take some immediate steps to pay off debts and get everything in your credit file up to date. After that, it is simply a matter of time and consistency to ensure that you once again are getting the best car loan rates.
2. Term of Loan
This is more black-and-white than the first two factors. Typically, a lender will identify some sort of cut off with regards to loan-to-value, and all loan requests that fall over that mark will be subject to higher rates. Coming up a with a larger down payment can help keep you under that line.
As a final tip, always get financing beforehand. Even if you end up going with dealer financing, it will you leverage.