Buying a brand new car is a thrilling experience for most people, though it can be hard to part with such a great deal of money. This money is the reason that it is important to get a great interest rate. There are a lot of factors that can determine your interest rate, but there are also some things that you can do to get the very best rate possible.
Interest’s Determining Factors
- The car. New cars often have the lowest rates, but do some comparisons between lenders. You may find that some have better deals.
- The lender. Unless you are borrowing the money privately, the loan will come from the auto maker, a bank, or a credit union. Each has its own interest rates.
- Your credit. The better your credit history and credit rating, the lower your interest rate will be. If you have amazing credit, you might be one of the 15% of buyers who is offered 0% interest.
- Loan term length. Term length is the length of time that you will be paying over. This is typically two to five years, but depends on your needs. The longer the term, the higher the interest rates will be.
Dealing with Lenders
Loans from banks, auto makers, and credit unions go through the car dealer. He or she serves as a sort of middleman and benefits a bit from the transaction. Obtaining your loan through the dealer is not necessarily more expensive than getting a private loan. Dealers can often even get buyers special, low rates from the lenders that they work with.
Getting the Right Term Length
The current average term length for a new car loan is over five years. While this might make some buyers feel safe, it can actually be a problem. By taking so long a time to pay off a vehicle, you run the risk of having an upside down loan – this means that you owe more on the car’s loan than the car is worth in the first place. It can save you a great deal of money if you get the shortest term that you can possibly afford.
Do Some Research
Know what benefits you have on your side. If your credit score is great, you can often negotiate your way into a lower interest rate than you are quoted. Don’t buy at the first dealership that you visit, either. Shop around. Talk with dealers, ask them what they can do for interest rates in your situation, and let them know that you are looking around in many places for a great deal. Car dealers will bend over backward to get you to buy from them instead of the dealers across the street.
When he’s not reading about the latest auto news, Miles Walker looks at the best places to compare car insurance over at CarinsuranceComparison.Org. His latest article reviewed car insurance comparison quotes.
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