Are you in need of a new car? Here is the good news for you. It is now possible to upgrade that old clunker to a new model and at the same time save your money. If you don’t have enough cash needed to purchase a new car there is an option of borrowing money. You need a good planning, shopping and persistence in order to find the best deal. People with good credit rating should not have any problem in getting a car loan. It is important to note that in case you have a huge credit card bill and you have made some large purchases such as a home or another car, you are likely to get a loan with higher interest rate.
A good credit history is a very important asset because it is a basic requirement when it comes to applying for car loans. You need to ensure that you keep your payments current to avoid the late notices that will appear on your credit report. Borrowers should ensure that they pay their debts on time before applying for a car loan. Financial lenders will ask you to list the number of accounts you have, you need to show some savings too. Your credit score is very important since it dictates the interest rate to be charged on your loan.
There are various financial institutions that will finance a car for you. A reputable lending institution will obviously make good profits from the loans it offer otherwise it won’t be in lending business. If you want to apply for a loan you should use reliable financial lenders such as credit unions, banks and many others, but you should first compare their interest rates. Most of the car dealerships are always ready to arrange a car loan for you. Before you decide to take a loan you need to choose the car you like, go for a test drive and then make a decision. Reputable car dealerships are honest and will guide you how to save your money on your car loan. You should also know that a sales person may want you to buy an expensive car, but remember that you need to stay focused on what you want and get the best for your money.
Seven Ways to Save your Money on Car Loans
a.) Good Credit Rating
The best way to save your money on a car loan is by having a good credit rating. You can improve your credit rating by avoiding late payments. Borrowers should pay their debts on time before applying for new loans. Individuals with good credit rating get loans at lower interest rate.
b.) Down payment or Trade-in
If you pay a sizable amount of down payment or you trade-in, it means that you will only have to borrow a small amount which will attract lower interest rate. You can easily avoid the hassle by pre-approving the finance for your car loans.
c.) Consider variable rate loans
These loans have official interest rate that are lower compared to fixed variable interest rate. There are many factors that the borrowers must consider when applying for a loan. Normally the official interest rates determine the standard variable loans.
d.) Shop for Car Loans
A car loan is a more important factor when buying car. You should shop for a good loan before you decide to sign the paperwork. A borrower can start with the bank, but it is important to look around in order to compare car loans the rates offered by the other competitors including the credit unions.
e.) Carefully read the terms
Once you get a number of good lenders, you should review their terms before you can make any decision. The terms, amount financed and the interest rate will help you to make the right decision. You should be keen on the total cost of the loan instead of concentrating on monthly payments.
f.) You should avoid dealership loans
You should not allow car dealers to decide on your creditworthiness. Before buying a car, you need to show them the best pre-approval you already have. It is advisable to go for shopping before you can decide where to buy your car.
g.) Avoid financing addons
Be wary of add ons and you should not consider financing them. Remember these adds ons could have damaged fabric protection, deteriorated paint sealant and no extended warranties that can protect your investment.