With new and used car prices higher than ever, more people are finding that they need to get a car loan to purchase a car. Unfortunately, interest rates are significantly higher now than they were two years ago, increasing the overall cost of a loan, so getting the lowest interest rate you can is even more important now than it was before. Here are four quick tips to get a lower interest rate on car loan.
Tip 1 – Get Your Credit Score As High As You Can
The people that get a lower interest rate on car loan quotes are those with the highest credit scores. Getting your credit score as high as you can prior to applying for a car loan will help ensure you will get the lowest interest rate you qualify for. Things you can do to boost your credit score include paying down any credit card balances so your credit utilization rate is low and making sure you are paying all of your bills on time to avoid default penalties to your credit score.
Tip 2 – Get Prequalified
Another good tip to get a lower interest rate on car loan quotes is to get prequalified for the loan with a lender you already have a relationship with. The interest rates you are offered by lenders you already have accounts with are often lower than what you would be offered when seeking a loan at the dealership. Getting prequalified will also let you know how much you can afford to pay for a car before you begin shopping for one.
Tip 3 – Shop Around For The Best Rates
Different lenders will offer different interest rates for the same people based on the same information. That is why it is beneficial to shop around for the best interest rates before settling on a car loan lender. There are many rate comparison tools available on the internet where you can enter some basic information and see multiple quotes from a variety of lenders. The results displayed should include the Annual Percentage Rate (APR), the term length, and the conditions for the loan.
Tip 4 – Consider A Co-Signer
If your credit score is not good enough, you can get a lower interest rate on car loan offers by having a co-signer with a better credit score on the loan with you. Having a creditworthy co-signer willing to accept the risk of applying for the loan with you strengthens your position with the lender. It is important to remember that your co-signer will be responsible for paying back the loan if you fail to do so, making it very important that it is a person you trust and that trusts you. The most common co-signers for car loans are spouses and parents.
Get A Lower Interest Rate On Car Loan Quotes With These Simple Tips
Following these simple tips can lower the interest rate you are offered for a car loan by as much as several percentage points, potentially saving you thousands of dollars over the life of the loan. While there are many complex calculations that go into determining the interest rate an individual is offered, you can influence these calculations in your favor with quick positive actions while avoiding actions that could have a detrimental effect on your finances.
Do you have any tips on how to get a lower interest rate on car loan quotes? Tell us about them in the comments below.
Toi Williams began her writing career in 2003 as a copywriter and editor and has authored hundreds of articles on numerous topics for a wide variety of companies. During her professional experience in the fields of Finance, Real Estate, and Law, she has obtained a broad understanding of these industries and brings this knowledge to her work as a writer.