Getting a new car can be a lot of fun, but getting the money to pay for it can be a hassle. The goal is to get the best term with the lowest interest rate. Here are some stress-free ways to get the best car loan.
There are a number of things that affect your rate and how you can get the best rate. Interest rates are based on what the prime rate is. Based on the prime rate, lenders offer a wide range of interest rates and packages.
Rates will also depend on how the market is doing. When sales are low, the big competitors will often offer 0% or rates that are below prime. Zero percent is also used to help sell less popular cars. When the interest rate is cut to a very low level, the loan term is usually cut as well. It's very common to see 0% interest on loans for 2 or 3 years. As the loan term gets longer, the rate goes up. Keep an eye out for these chances.
The rate will also depend on the kind of car you want to buy. Prices for new cars tend to be less than prices for used cars. Also, dealers often offer deals on new cars where the down payment is not required or the term is made longer. They might also offer a better interest rate, and the price of the car might even go down. And, of course, the less the car costs, the less you'll have to pay each month.
If you don't have cash on hand, you'll have to borrow from a lending company. For convenience, automakers offer their own financing, which is very competitive and easy to use. But you should check with your regular bank because they may be able to give you a better interest rate than the automaker.
Most of the time, the rates that dealers offer are very competitive. The trick is to know and understand what is being offered and then negotiate the best deal possible. Don't just assume they'll give you the best rate.
The rate you pay will depend on how long the term is. The longer the term, the less you'll have to pay each month, but the interest rate will be higher. To get the best rate, figure out how much you can pay each month and then figure out how long that payment fits into. Don't keep going any longer.
The interest rate you pay is also affected by how good your credit is. The less you have to pay in interest, the better your credit score. The Consumer Federation of America says that only 15% of people who want to buy a car can get financing with no interest. So don't beat yourself up if you don't get a good grade.
Before you start shopping for a car, you should know your credit score and the interest rate you can get. This way, you can choose a term that works for you and a price range that you can afford. Now, all that's left to do is look for cars in the right price range. You'll know when the right person comes along. And now that you know how to get the best car loan, you can drive that new car off the lot in no time!
