Tips on getting the best new car interest rates
There are some people who will shop around with the ultimate goal of getting the lowest price for the car that they really want. But this shouldn’t only be the main area of your concern. You should also be looking into how to get the best auto loan that offers the lowest new car interest rates available.
This is so that when you finally do have the car of your dreams, you won’t have to spend the next few years having to pay an arm and a leg to cover your auto loan and the interest that comes with it. So how do you do that? Here are some sure-fire tips on how to get a new car with the lowest interest you can:
Determine your Budget
It would be useless to get the car of your dreams only to have it repossessed a few months down the line, right? So the best plan of action here is to be practical. You should really start off with determining how much you will be able to spend each month for the new car that you are going to get.
Without your ability to pay what you owe, it really is counterproductive getting a vehicle in the first place. The best way to figure out your budget is to set aside about 25% of your monthly income. Multiply that to how many months you want your loan period to be and you will be able to get your budget amount.
Narrow Your Car Choices Down
Now one of the best reasons why you should be buying a new car is that there is a smaller chance of it becoming a money pit as you use it. But the best reason for getting a new car is the savings that you can be getting. Yes, newer cars often cost a whole lot more than used ones but they come with lower interest or even no-interest rates from the dealership.
Once you have determined the budget that you are going to be sticking to, the next thing you have to figure out is making a list of the cars that you will be choosing from. You have to base your choices first and foremost by the budget that you have. Then, from that, you can start narrowing it down further with the features that you are looking for.
Choose Where You Will Be Getting Your Financing
The next tip on how to get the best new car interest rates is to show around for your auto loan before you even go to a dealer. This may be more important than you think.
Securing the financing that you need to buy your car will dictate how much you will actually have to pay back each month. Choose which lending institution will work best for you by looking into your eligibility as well as the APR that they offer. Depending on your credit score, you can go to a bank, a credit union, or even to a lending company.
For those who have bad credit, one of the best ways to purchase a car is through bad credit auto loans. Although they have higher interest rates, the likelihood of you getting approved is much higher than when you try to secure your financing through your bank.
Maintain a Good Credit Score
There is nothing that will enable you to get the financing that you need for a car than a good credit score. This will also determine how high your APR will be when you do secure a loan.
You can improve your credit score significantly if you pay your bills on time and don’t take on too many lines of credit. Even if you don’t miss any payments, the number of credit that you have like credit cards, mortgages, and auto loans have the biggest impact on your credit report.
Consider Getting a Cosigner
If you can’t possibly improve your credit score and you need to buy a car as soon as possible, getting a cosigner to help with securing the financing that you need is another way to go. Although this may not necessarily affect whether or not you will be getting a lower interest rate, it will help determine if you will be approved for a loan or not. This is true especially for those who have bad credit and lenders tend to view as a financial risk. Having a cosigner to help with the responsibility of having to pay for the loan will help greatly.
Compare your Auto Loans with their APRs
APRs or Annual Percentage Rates is the amount of interest you will be paying for a year. This is the amount that you should be focusing on when looking into the numerous auto loans out there. The lower the APR, the less amount of money that you will have to pay in the long run.
Consider the Length of the Loan
It only goes to figure that the longer the term of your loan is, the more amount of interest you will have to be paying each month. It is best to find an auto loan that fits in with your monthly budget. You may be able to afford a loan with a shorter term but have to pay a higher amount each month. Or you can get a longer loan time but have to pay more in the long run.
This all depends on what you are willing to pay monthly and on your overall cost. The best way to get around this is to look for the most affordable loan in the shortest time period that you can.
Get Pre-approval For Your Loan First
Getting pre-approved for a loan does not necessarily mean that you are going to take it. It only means that you are sure that you will get the financing that you need before you even go to a dealership. This also helps give you leverage when negotiating with the dealer. This pre-approval will also give you an idea of how much you will actually be able to spend to buy the car that you want.
When it comes to getting the best new car interest rates the key is to shop around. You will have to do enough research on the auto loans available as well as the cars that you can afford on your budget. Don’t be hesitant about looking for the best loan out there with the lowest possible interest rate. You will be able to save money if you do so in the long run.
Shopping around for the best auto loan deal will enable you to get the lowest interest rates there are. And if you are able to get pre-approved for a loan, you will be able to use that as leverage for your negotiations with the car dealer.