Making the decision that you are ready for a new vehicle is not an easy one, but your work is just beginning. Finding a new car that is also affordable is more difficult than many realize. Research is important and that includes finding low interest rates on car loans, here are a few tips for individuals to achieve this.
Check credit score
This is important before even considering applying for a car loan, as it can greatly affect whether or not a person is approved and how much they can borrow as well as the interest rate for their loan.
There are several ways to improve a credit score if it is less than desirable, and this will also help an individual get a lower interest rate.
Go for independent financing before going to a dealership, you may want to check out independent lenders, as they sometimes offer Low Interest Rates on Car Loans over dealers.
In some cases, dealers can make money off the financing of a car, which gives them an extra incentive to make potential buyers dish out more money for their car loan.
Watch out for zero-interest loans
Even though this sounds appealing to several people, it sometimes follows the saying “it’s too good to be true.” This is especially the case if a person is forgoing a rebate in return for accepting the low-interest rate. Before agreeing to this idea, make sure that you won’t be paying more in the long run, as the rebate may be a more beneficial tactic for prospective car buyers.
Home equity is an option
This is possibly the best way to achieve low-interest rates on a car payment. Tapping into the equity of your house by opting for a home equity line of credit (HELOC) or a home equity loan can give potential car buyers low-interest rates because they are secured against the value of your home. This can also be tax-deductible.
HELOC often offers the lowest interest rate, but there is some risk involved. The rate is variable and it could result in the person paying more as a result of rates rising down the line. As a result, these loans are better off if they are for shorter terms such as 36 months.
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