Shopping for a new car can be an exhilarating experience! There is nothing like the promises of a smooth ride, fuel efficiency and new car smell to fully intoxicate the senses of a car-shopper. Aside from the perks of new car ownership, there is the down side of having to pay for the vehicle, as you cannot get something for nothing. One way to make the bitter pill of parting with your money easier to swallow is saving money on your auto loan rates, and there are several strategies you can follow to ensure you get the lowest interest rates available on your car loan.
Before shopping for a large ticket item and applying for any type of line of credit, you should take the time to review your credit history. The simple fact is the higher your FICO rating, the lower interest rates you will be charged to borrow money of any type and this can result in saving hundreds or even thousands of dollars on your auto loan rates. By inspecting your report prior to arranging your car loan, you will have the time to take the steps required to clean up your history and possibly raise your score.
You can also save money on your auto loan rates by securing one prior to entering a dealership. Even those with excellent credit may have difficulty qualifying for the dealer incentives, that is why arming yourself with your own means of cash can relieve some of the pressure associated with car shopping. By researching and securing the lowest car loan rate from the comfort of your own home, you will not be under any pressure to accept the auto loan terms offered directly from the dealer.
Another way to secure independent financing for a car purchase is by tapping into your home's line of credit, courtesy of a HELOC. Instead of using your car as collateral, your actual house will be used. Borrowing against your home's value should not only provide you with lower interest rates than a typical auto loan, but in many cases, the interest paid istax deductible when properly itemized on your taxes.
If despite those options you still want to go with a dealer's promotional incentive, it is important to calculate the offers they have to see which one can save you the most money on your car loan. Car-buyers must crunch the numbers and figure out if taking a rebate incentive or choosing low financing will be more beneficiary to their financial bottom line.
Finally, if after crunching the numbers and researching all your options for a low interest auto loan rate is not financially sound, leasing a car may be a viable option. With leasing, since you are not purchasing the vehicle you are not making payments towards the full purchase price of the car. The payments are typically lower than the monthly payments associated with an auto loan, making this option enticing to many car shoppers.
