Even with the perfect storm of car shopping opportunities, consumers still need to proactively manage their resources to avoid paying unnecessarily high auto loan rates. The first step to avoiding high car loan rates is to review your credit report and take the necessary steps to raise your score. Your credit history and score are the primary factors that determine how much you need to pay to borrow money in the form of an auto loan rate. The higher your credit score, the lower the interest will be on your car loan.
Get Pre-Approved for Your Auto Loan
The next step is to research and get pre-approved for an auto loan before visiting a dealer. By investigating and researching your loan options online, you will be able to comparison shop and easily avoid a high auto loan rate. Avoiding dealer financing should be your main goal as that process may result in high auto loan rates.
How Credit Affects Your Car Loan Rates
If your credit is less than stellar but you are working towards improving it, getting a cosigner for your car loan who has a better credit rating then you will help in avoiding high auto loan rates. The cosigners favorable credit score is weighed heavily in the equation that determines what rates you will be charged.
Those with bad credit who cannot get a cosigner can also avoid high auto loan rates by making a larger than average down payment on the vehicle. 20%-25% down will show the lender how committed you are in your financial obligation to the vehicle purchase and may tip the scales in your favor.
Get a Cosigner for Your Loan
If everything works according to plan, you have just taken some important measures to get the best car loan rate possible. Before signing on the dotted line, make sure to read all the fine print of the contract to ensure that you are getting the loan rate you really wanted. This is important when considering the true cost of owning a car.
Those looking to buy a new car sometime in the near future should take action sooner than later, as there are plenty of bargains to be had. The state of the economy is been an absolute pain, but the dealer incentives, low interest rates and government incentives for new car purchases all work together to create that auspicious silver lining.