Low Interest Rate Used Car Loan - Getting A Low Rate Auto Loan
Written by: Carrie Reeder
If you are in the market for a used car loan, be prepared to
negotiate a good deal. Initially, car salesmen try and convince
prospective buyers to agree to a huge sales price and interest
rate. Of course, this maneuver does not serve to your advantage.
Instead, it boosts the dealerships profit margin. If you have
good credit, you are in a position to negotiate a better deal.
However, if you have a low credit score, here are a few tips to
help you obtain a low rate auto loan.
Boost Credit Score and Rating
Before offering a low rate for a used auto loan, the dealership
or financial institution will review your credit report. Credit
reports indicate our credit worthiness. If you have several past
due or missed payments, lenders will consider you a terrible
applicant. If you are approved for credit, the lender will not
offer you a low rate.
Improving your credit is the best option for getting a low rate
used car loan. Although lenders will approve an applicant with
bad credit, the fees, rate, and terms are awful. To avoid paying
higher fees, delay the car buying process for at least six
months to a year. Take this time to boost your credit score.
To begin, review your personal credit report. If you have past
due or unpaid accounts, contact the creditors and schedule
payment arrangements. Plan to reduce your debt to income ratio.
Furthermore, pay all your creditors on time, and never skip
Get a Co-signer or Down Payment
If you have bad credit, having a co-signer is a great way to get
a better rate on your used car loan. To qualify for low rates,
your co-debtor must have a good credit rating. Having a
co-signer with good credit puts lenders at ease. If you are
unable to repay the loan, the person who co-signs for the loan
becomes responsible for the payments. Moreover, if you have good
or bad credit, saving money for a down payment will help get you
a low rate.
Get Auto Loan Quotes from Various Lenders
Instead of securing your auto loan financing through a used car
dealerships, shop around for your own financing. If you have
good credit, your current bank or credit union may offer you
great rates. Individuals with bad credit may obtain better rates
through a sub prime lender or auto loan broker.
Getting quotes from lenders is simple. Many lenders have online
applications. Furthermore, several auto loan brokers operate
online. Simply complete an application and get pre-approved for
an auto loan. If using a broker, you are able to obtain multiple
quotes from at least three or four different lenders. After
reviewing quotes, choose the best loan deal.
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