Tips for Getting the Best Car Loan
Unless you’re going to write a check to a dealer for a car, one of the best ways you can save is by lowering your monthly price.
In fact, dealers will use this price as a benchmark for their negotiation instead of the total price of the car, so if you do your homework going in, you can ensure that you get the best deal possible before driving off the lot.
Centers Health Care has four steps you can take to get the car loan you want.
- Know Your Credit Score
Have a report run of your credit score. It can range from 300 to 850, and the higher the number, the better chance you have of getting a low-interest rate on your loan. If your score is below 650 or 700, see what steps you can take to improve it before applying.
- Shop for Rates Before Going to the Dealer
A local bank or credit union can preapprove you for a loan, and it can often be at a reasonable rate. You can then take this information to the dealer, where they can use it as a baseline and potentially find a better rate from their list of lenders. If you don’t go in preapproved, the dealer may offer you a higher interest rate than you could’ve had from your bank.
- Watch the Annual Percentage Rate
The annual percentage rate (APR) is what you will pay in interest each month in exchange for being offered the loan. The closer to 0% you can get, the more favorable the loan will be to you.
- Down Payment vs. Monthly Payments
As we mentioned, the dealer will likely talk to you in terms of your monthly payment. So if they add months to the loan to only slightly lower the monthly payment, you’re likely going to pay more in the end in interest. Offering a certain amount as a down payment (typically around 10%) can also potentially lower your interest rate. Even if more than that doesn’t affect the rate, if you can afford to spend the money upfront, it’s cash that you can pay for the car interest-free. Just be sure to determine what you can afford.
