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You have your eye on that shiny new Lexus – well, maybe it’s a Kia, but it’s perfect and you want it to be yours, all yours – as soon as possible. At the same time, you definitely don’t want to be burdened with paying almost double the value of the car until you’ve finished paying off the car loan. Here are five tips to help you get the best possible interest rate on an auto loan to have the car of your dreams in your driveway.
1. Check your credit rating.
If you don’t already know what’s on your credit report, this is a good time to find out. Before you apply for an auto loan, get a copy of your credit report to find out what surprises might be lurking in it. You may just find that it contains incorrect information that should be corrected, or that it contains something negative that can either be explained or easily corrected with a few phone calls or letters. Either way, it always helps to know what the credit reporting agencies are saying about you before you start shopping for loans.
2. If you have good to excellent credit…
…then you may qualify for special incentive financing available through the car dealer. If the car dealer is offering a low, low finance rate, check all terms and conditions carefully online to make sure you qualify. Often, that 1% financing rate is reserved for those who have excellent credit and can afford a 12-month financing plan. If that’s you – then grab the deal. 1-2% financing is a bargain if you can handle the other terms and conditions attached.
3. If you need a term of more than 12 months or you have irregular credit…
…make your own financing arrangements before you step onto the car lot. Check with your normal bank first for a new auto loan, as they may have better interest rates for those who are already established customers, or those who keep all their savings, checking and loan accounts through one bank. Let’s take away. To trade with someone who already knows you, it can save you a few percentage points in your interest.
4. Shop online for the best auto loan available.
On many online credit Web sites, you can submit a request for multiple quotes from area finance agencies and lending firms. Simply submit your request for an auto loan quote through an online form, and the web site will submit it to up to four financing firms at a time. A representative from each agency will contact you within a few hours to a day or two to discuss your request with you and give you a quote for the interest rate and monthly payment amount they can provide. Shopping for credit online makes it easy to compare and choose the best auto loan terms for you.
5. If you have bad credit but you need that car…
…One of your best and most often overlooked options is to find someone to co-sign the loan for you. In most cases, when you have a cosigner, you’ll get the interest rate they qualify for, which means lower monthly payments for you.
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