Get the Best and Lowest Auto Loan Rates with These 4 Tips
Fed up with taking public transport and now looking into buying your first car in the next few months? Been trying to squeeze in everyone in your small family van that you suddenly feel the need to purchase a larger family car? Or maybe you just want to have another vehicle for your growing food business?
Whatever the reasons are, people buy cars nowadays out of necessity as it helps a lot and is a more convenient form of transportation. But of course, buying a car is not as easy as it seems. It entails two options: purchasing in cash or through an auto loan.
If you do not have enough cash at hand to get the vehicle you want, then auto loans will likely be the best option. But take note that you need not agree with the terms of your dealer. In fact, you can shop around for car loans. Many credit institutions and banks have car loans that are flexible and affordable. And all you have to do is look around for the best auto loan, and one with the most affordable interest rates to psyche yourself during the application process.
Here are some points to ponder on if you want to land the best and lowest auto loan rates that fit your budget.
Improve your credit
Much has been said about credit. It is an important factor for many financial institutions, mand they use it to determine an applicant’s creditworthiness. First, you have to be informed about your current credit score. There are sites such as Credit Sesame which let you take a peek at your current credit score. Credit scores range from 300 to 800, with the latter considered to be the highest and most exceptional. A high credit score is what you need to bag lower interest rates in whatever loans you need, be it a business loan, personal loan, or auto loan.
To improve your credit score, these are things you can work on to:
Pay your debt
If you have revolving debt, eliminate all these by paying them in full. Your credit score highly depends on your current debt-to-credit ratio. This shall boost your credit score in no time.
Increase credit limit
Improve your debit-to-credit ratio by requesting for an increase in your credit limit. However, you must do this a few months before you actually submit an application for your auto loan. Increasing the credit limit may result in a hard pull of your credit report. This decreases your score for a certain period but it will get back to its original status after a few months.
Monitor credit reports and track errors
Even when all credit bureaus use automation in recording your credit status, there will always be instances when there will be technical glitches. To prevent this, see to it that you always monitor your credit report and see if there are mistakes that might have been overlooked. Errors can result in a bump in your credit report, resulting in low credit scores.
Ask for free credit
Another way to increase your credit score is by asking your credit card processing company to give your free credits. If you are a good payer, your credit card company should be able to give you some.
Save up for down payment
If you want to have the lowest auto loan rates and save a major chunk of cash in the long run, one of the best advice to give is to save up on your down payment. The bigger your down payment is, the better your chance of bagging a good auto loan rate will be.
If having a car is a long-term goal–say you want to have one in the next three years–start by saving up a portion from your income every month. This way, you won’t have to spend too much on your auto loan. You also could sell stuff you no longer use or take a second job to fund your dream car.
Shop for the best auto loan
When buying a car, don’t just visit a dealer and sign the application form for an auto loan abruptly. It needs careful planning and scrutinization. Every decision is vital in shaping your finances for the future. Take time and hop from one auto loan company to another. Compare and contrast each one’s offer and see what best suits your needs and budget.
The best auto loan rates can be found in different avenues. For one, you can check out credit unions near you. Credit unions are usually overlooked and are not being regarded as the best option for vehicle and cash loans. They have lesser requirements and can be lenient about one’s credit score. However, the downside of credit unions is that the processing can take a long time, which is a result of the union’s lack of manpower. If you are not in a hurry to have a car, you can consider this option.
The next to consider is your own bank. Of course, if you have already established rapport with your bank, then it should be easier for them to give you a nice auto loan package. It will always be best to have a good relationship with your bank and be a good payer. This will give them a positive impression of you, which will be helpful as you apply for a loan.
The perfect auto loan company is out there, somewhere, waiting for you. You just have to take your time, study each option, and evaluate which one will give you the most value for your money.
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