How can I be sure I am getting the best loan rate possible? When you're financing a car, you want to be sure you are getting the best loan interest rate you can. The world of auto loan rates can be confusing, especially if you've never done anything like this before. But there are a few tried and tested tips for ensuring that you are getting the best loan rate possible.
1. Get a credit report
Your credit report will form the basis of your loan and determine its characteristics, so it's a good idea to get one before you start looking at different rates. If you have good credit, then great! If you don't, it's not the end of the world, there are plenty ways to boost your credit score, including credit builder credit cards and accounts. If you're looking to get the best loan possible, it might be worth upping your score if you can.
2. Sort out your deposit
Your deposit amount will have a big effect on your loan, put simply, the more deposit you have, the less of a loan you need to take out. Obviously, this can drastically alter your loan rate, so if you're looking for a lower interest rate, you might want to save up more of a deposit before committing to financing a car. It can also play a part in any bargaining or haggling conversations, as clients with a larger deposit will attract more dealers and have more weight in any discussions about loans.
3. Contrast and compare
There are plenty of dealers out there, all offering differing auto loan rates and packages, so take your time and shop around. You can even apply for multiple loans with different dealers and contrast and compare the results when they come in. In numerical terms the rates may not be all that different, but depending on the size of your loan, a difference of 2 or 3% could make a massive difference to the amount you are paying back overall. Companies also like to better each other, so if you can go to one company with a cheaper rate from another, they may meet it or even beat it, giving you an even better loan rate.
4. Make sure you know who you're buying from
With a great number of loan dealers out there, it can be easy to get caught in a compromising situation. It makes sense to know the company financing your loan, as it could have massive repercussions on your finances in the future. If you're borrowing from a larger bank or someone you've dealt with previously, this may not be necessary, but with someone new it doesn't hurt to check out their history.
5. Calculate the Interest
This is an important one. It is essential that you calculate how much you're going to be paying back overall before you commit to anything. You might find that although the deal and rates look great, the bigger picture is less pleasing. Calculate early on to avoid regretting it later.