When looking for a way to finance a new car, it is advisable to seek a low rate auto loan, which will help you to save significant money over the repayment course of the loan. Apart from saving money, an auto loan with a low interest rate will also help you to get a car that’s a better value for the money you have. Below are tips on how you can qualify for a low rate car loan:
1. Search Around
Today, there are many lenders in the market offering auto loans. This has resulted in great competition, as each lender tries to secure good customers through attractive auto loan packages, including low rates. By comparing the rates of different lenders, you will be able to pick out that those are most beneficial to and affordable for you. The best way to carry out this search is through the Internet, which will also help you to determine how much car you can afford, thus helping you to be better prepared to buy a car.
2. Fix and Repair your Credit Score
A great determinant of what interest rate you will qualify for is your credit score. This means that with a good credit score, you can more easily qualify for a low rate auto loan than if you have bad credit. In fact, it is nearly impossible to get a bad credit auto loan with a low rate of interest. One way to fix or improve your credit score is by paying off your credit cards at least six weeks before approaching a lender. Ensure that your bills are paid in time to increase your credit rating. Also, check out your credit report, and if there are any discrepancies, make the necessary calls to correct them.
3. Make a Big, Upfront Payment
Currently, many lenders do not require you to make a down payment. These are known as no money down auto loans. However, making a large down payment can qualify you for low rate auto loans, since you will be reducing the auto lender’s risk in the loan. Your lender will therefore have greater confidence in your repayment ability and will be more willing to grant you a loan with a low interest rate. A large down payment will also help you to pay off the loan faster, since you will have greatly reduced the loan balance and its subsequent payment period.