Do’s and Don’ts for getting a low rate auto loan

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Getting the best deal for your auto loan is important. This means getting the best possible interest rate on it. A low rate is helpful in more ways than one. But, to get a low rate auto loan, you need to know what to do and what to avoid. The following list will help you avail the best deal.

To get a low rate auto loan, do the following:

, Don’t consider buying a used car

Doing your homework is always helpful as it helps you evaluate the type of car that is suitable for you. Deciding the type of car you want to buy can depend on various factors like your income and your basic requirement. Compared to a new car, the old car can give you the benefit at a lower rate. Since the purchase price of a used car is cheaper than a brand new car, the lender will be willing to lower the interest rate on the used car. Low risk attracts a cheaper interest rate. Thus, consider buying a used car wisely as it can significantly increase your chances of getting a low rate auto loan.

, Know your credit score

When you have prior knowledge of your credit score, you are in a better position to negotiate a better rate. A good credit score enables you to build credibility and aim for auto financing within your budget. If you are struggling to improve your credit score, start by paying off your pending loans and overdue bills. Once your credit score is checked, getting a low rate auto loan becomes easier.

To get a low rate auto loan, avoid the following:

, Don’t ignore the benefits of down payment

Many times the benefits of a huge down payment are overlooked while buying a car. However, a good amount of down payment can directly reduce your interest rate. As the down payment is proof of your strong financial standing, you will be able to negotiate and get a lower rate auto loan easily. The best down payment amount is 20 per cent of the total cost of the car. Hence, making a down payment is an easy ticket to availing the loan.

, Don’t forget to choose short loan tenure

While shopping for such a loan, you will have the option of choosing a shorter loan tenure. The longer you lend money to the lender, the higher the interest rate. A shorter loan term on your loan means that you will be able to repay your loan quicker. Also, it means less time for interest to accrue. As soon as you choose a shorter loan term, you automatically choose a lower rate auto loan.

When you go shopping for an auto loan, it’s a good idea to be prepared. Knowing what to do and what not to do can make all the difference. Hence, do not forget to check the list of do’s and don’ts to avail auto loan at low rates with ease.

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