Whether this is your first car or you're an experienced car buyer, knowing the secrets for getting the best car loan rates will help you to make the best deal possible. There are a few things you need to know and decide before you go anywhere near the car lot. While negotiating with a lender may seem intimidating, it is actually very easily accomplished with the right tools and techniques.
Check Your Budget
The first thing you need to decide is how much you can afford to pay each month. Once you know this, use that number to compare auto loan rates. For instance, if your monthly budget leaves you with $350 per month and you want to spend that on a car, the first thing to do is deduct $150 for insurance and other things from that amount. Take that amount and enter it into one of the car loan calculators found online, to find out how much car you can afford. Most car loans are for 36 to 72 months. You can figure a 72-month loan with interest, and find that you should be paying no more than about $10,000 for the car.
Know Your Credit Score
Get a copy of your credit report before shopping for low car loan rates. Knowing what is on your report, and taking a little time to fix anything you can, will help you a lot toward getting the best car loan rate possible.
Get the Loan before the Car
The best thing to do is look at a few cars and do several test drives until you find one you like within your estimated budget, and then leave the car lot. You do not want to pay up to 10 percent extra interest the banks allow the car dealer to charge you for financing through them. Shop elsewhere for your loan. Look at the many car loans available online, or check with the banks yourself. You need to take at least as much care shopping for a car loan as you did shopping for the car.
Use the Competition to Your Advantage
In the rapidly growing arena of auto loans, there is a lot of competition amongst the various lenders. You can actually create leverage from this competition, using it to your benefit by shopping around in search of the best auto loan rates. This gives you an advantage in the long run, because it allows you to negotiate lower interest rates when you need to, getting a better deal overall.
Find Out What the Dealer Paid
If you know what the dealer paid for the car, you have a much better chance of getting a better deal for it, and thus the best car loan interest rate.
Never Disclose your Budget to the Dealer
The finance officer at the auto dealership is there to make the dealership money, not you. So if you tell them you cannot go over $200 a month, you may find yourself paying $250. It is best to say you have not decided a price yet and see where they try to lead you.
Searching for the best car loan rates may seem time-consuming and complicated, however, there are tools you can utilize so the process is painless and expedient. Should you be seeking a great rate for your loan, conducting an online search can provide better results and help you find the best rate available.
Shop Various Lenders Simultaneously
The biggest difference between looking for the best car loan rates online and over the phone is that when you request a quote over the phone, you are dealing with a solitary lender. On the other hand, when you request car loan interest rate quotes over the Internet, you are typically requesting a quote from several different lenders all at once, driving them to compete by offering the best car loan rates they can. Overall, it is in your best interest to look at several lenders via the Internet, as you may find a lender that best suits your needs, without any hassle over the phone.
Apply More Quickly
Another benefit to using the Internet to seek out the best car loan rates is the expediency with which you can apply when you do find the right lender. You can provide all of the necessary information more easily, and submit the application almost instantly.
Receive a Fast Response
Receiving a quick response to your application is another great benefit to an online rate search. Typically, you are not going to receive an approval notice over the phone with a lender, but applying online will give you plenty of quotes and pre-approvals. Additionally, lenders may not be as willing to provide numerous quotes to you over the phone. If you have qualified for a particular rate, the lender will want to you to commit to that rate, and most likely won't offer other rates to you. In general, an online search will provide you with results at a much quicker pace.
It may seem a bit uncomfortable at first, but negotiating with the lender allows you to get the rate that is best for your circumstances. Overall, you may encounter some difficulties here and there, but it will be worth the trouble. You'll have obtained the best rate for your car loan.
