When it comes to getting a car loan, one of your main priorities is probably to get the lowest interest rate car loan possible. The best way to do that is by following these five tips:
Check your credit score
Before you even start shopping for a car, check your credit score. If it’s fairly low, then that may be the reason you aren’t getting approved for as many loans as you would like. One way to improve your score is by paying off any outstanding debts on your credit card accounts.
Generally speaking, the higher your credit score, the lower interest rates you’ll be able to access (and the less you’ll have to pay overall!).
You should also carefully check your credit history to see if there are any errors. If there are errors, make sure you get these fixed before submitting any loan applications.
Shop around for loans
The next step is to shop around for loans. One of the easiest ways to compare loan options is to do so online. You’ll be able to see all of your loan options in one place and have the confidence that you’re getting the lowest possible rate. Additionally, you might want to make your way to some local car dealerships and check out their financing plans for each vehicle in which you’re interested. You can use your online research to ensure that the dealership is offering the best possible rate!
Try to get pre-approved
If there are certain car models you know you want, try getting pre-approved before making a purchase. Getting pre-approved is really helpful if you’d rather start shopping with a fixed budget in mind – this can give you a confidence boost when it comes to negotiating the price of the car. Getting pre-approved doesn’t mean you’re locked into anything, and if you change your mind you can still walk away from the pre-approval without incurring any costs or fees.
Get a loan with a fixed rate
When you’re looking for a loan, opt to get one with a fixed interest rate. If the rates are going to vary from month to month, then you’ll have no idea what your final costs will be in the long run. This is why getting an interest rate that doesn’t change is important.
However, it also means that the only way you can access a lower interest rate in the future (for example if you improve your credit score or want to change loan terms), is to refinance your loan.
Know what you can afford
Finally, don’t forget to know what you can afford in terms of monthly payments. This is extremely important in order to avoid making a purchase that becomes too expensive for you to handle once the excitement starts wearing off. Knowing what you can afford in monthly repayments means that it will be easier to compare loan options, because you’ll have a set limit of what you can afford each month in mind. To compare car loans online check out Driva for personalised rates from more than 30+ lenders.