Interest rates, applications and credit pulls, oh my! Shopping for a car loan is complicated. All is well when determining which car you would like to purchase, but things get sticky when it comes to financing. Why? Most consumers don’t realize that there are a few ways to prepare before heading to the dealership:
1. Know What You Can Afford
Decide if you will use an existing trade-in or cash for a down payment. A higher down payment reduces the amount of money you borrow, which lowers your monthly payments and the amount of interest you’ll pay overall.
2. Monthly Payment vs. Interest Rate
A common assumption is that the lower your monthly payment, regardless of your interest rate, the less money you are spending to pay off your car. However, the exact opposite is true. Higher interest rates can mean paying thousands extra in interest in the long run, so it is essential to understand what auto loan interest rate you deserve.
3. Research Your Credit Score
Most dealerships only offer 0-1 percent financing for those with super-prime credit, which is only 15 percent of the U.S. population. However, just because your credit isn’t in the 7 or 800′s doesn’t mean you don’t deserve a good deal. Understand in advance what an appropriate interest rate is for your credit profile, and bring those numbers when facing the dealer at your signing.
What if you have already obtained a car loan and you think you didn’t take the necessary steps for the best possible financing? Try auto loan refinancing.
Auto loan refinancing allows you to have a second chance at financing your existing car loan by working with a new lender. After finding a new lender with a lower interest rate and/or monthly payment, borrowers can complete the required paperwork in as little as a few hours. Most transactions can take place over email, fax or phone. Within the same day you apply, you can drive away with a lower interest rate and/or monthly payment and realize truly valuable savings.
So, whether you’re a first time car loan shopper or you have an existing car loan, be sure to do some simple, but valuable research to recognize and fight for the financing you deserve.
MoneyAisle.com allows the once tedious undertaking of finding the best interest rate on car loans and refinanced car loans to become efficient, simple, and organized by putting the entire experience in one online location. Lengthy applications and various credit inquiries are a thing of the past, when one 7-question form accesses MoneyAisle’s exclusive network of over 150 financial institutions who bid to give the consumer the best deal. Without any personal information required, consumers are empowered to find the best interest rate hassle-free.
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If you have bad or poor credit, then auto refinance is still quite doable for you. While your overall credit score may be sub 650, lenders will take into account how well you are paying on your current auto loan.
If you are current on your loan and have made on-time payments over 6-12 months, then the lender might give you a better rate.
Make sure that you are current on other liabilities, like your mortgage and credit cards too.
If you are paying more than 8% interest on your car loan, then consider applying for a refinance. Applying is simple, fast, and costs no money. Refinance also involves no fees. There is really no downside to trying to get a better rate through auto refinance.
If you get a lower rate and stretch your term to 60 months, then your payments will decrease dramatically. It isn’t uncommon to achieve $80 to $120 reduction in your monthly payment.
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