Car loans are one of the most common types of loans people take out. A car loan is a loan that is used to purchase a vehicle. The loan is secured by the vehicle, which means that if you default on the loan, the lender can repossess the vehicle.
Find most popular financial education, credit union, debt guide and many more with C1styourvoiceblog. You will get on with making a better life for yourself.
Interest rates on car loans vary depending on the lender, the type of loan, and your credit history. The average interest rate on a 48-month new car loan was 4.21% as of March 2018, according to Experian.
Here are some tips to help you get the best interest rate on a car loan:
Shop around
Interest rates can vary significantly from one lender to another, so it pays to shop around. Compare rates from a variety of lenders, including banks, credit unions, and online lenders.
Get pre-approved
Getting pre-approved for a loan gives you leverage when you’re negotiating with a dealer. It also allows you to shop for a loan with the best interest rate.
Have a good credit score
Your credit score is one of the most important factors in determining the interest rate you’ll get on a loan. The higher your score, the lower the rate.
Make a large down payment
Making a large down payment can help you get a lower interest rate. Lenders view borrowers with a lower loan-to-value ratio as being less risky.
Choose a shorter loan term
Shorter loan terms typically have lower interest rates than longer terms. A 36-month loan will usually have a lower rate than a 60-month loan.
Pay off your loan early
If you have the opportunity to pay off your loan early, do it. Most loans have no prepayment penalties, so you won’t be charged for doing so.
By following these tips, you can get the best interest rate on a car loan and save money on your purchase.