When buying a vehicle (either new or used), obtaining the right auto loan is as important as choosing the right car. The best auto loan rate is always the one that makes the most sense to your financial situation. To secure favorable financing, use these tips:
Start the Process with a Credit Union
Start the process with a credit union to get the best auto loan rate in Utah, Texas, or New York. Credit unions tend to offer lower interest than banks by 1% to 1.5%. Get either pre-qualified or pre-approved to have an idea how much you can borrow. Then, ask the dealer if they can beat the financial deal you already receive.
Know Your Credit History
You should be the best person to know about your creditworthiness. Get copies of credit reports from the big three agencies to review your credentials and correct any errors you have on your record. The more you know how low your credit score, the more you can demand a lower rate.
Don’t Shop Around for More Than Two Weeks
Getting your credit checked could lower your score by a few points. However, you can minimize the reduction when you apply for loans within two weeks. Within this period, all applications you make would only count as one hard inquiry.
Negotiate for the Total Loan Amount
Many borrowers make the mistake of negotiating for the monthly repayment rather than the total auto loan amount. Doing so wouldn’t necessarily decrease the interest you have to pay over time. The key is to have the shortest term possible without making your monthly repayments a nightmare.
Read the Fine Print
Check every word the contract says. Don’t rely on the dealer’s spoken promises too much because they’re not legally binding and impossible to enforce. Pay extra attention to mandatory binding arbitration and prepayment penalty provisions.
If you don’t have excellent credentials, be prepared to make compromises to secure the most favorable loan you could get. At the end of the day, the interest rate is just one of the many things you need to consider to get a deal that works for you.