Useful tips in getting the lowest interest rate on a car loan

There are many ways on how to obtain the lowest interest rate on a car loan. You only need to be patient enough since finding the best interest rate usually takes a lot of time. Always remember that you should not accept the deals offered by most lenders without examining it carefully. Make sure to choose the offer with the lowest APR for this would provide you greater savings. In case the loan rates offered to you are higher, you can search for better rates using different sources.  Besides this, you also need to consider other factors that could help lower your loan rates. These factors are as follows:

The type of car

The type of car you are planning to purchase affects the loan rate you obtain. New cars have lower interest rates since these vehicles can be used as collaterals. Used cars on the other hand have higher interest rates since they have lesser values and higher interests reduce the risks of missed payments.

The type of lenders

The type of lenders also affects the rates that you are getting from a loan. Although banks are popular for providing the most competitive rates, this is not always the case. The rates they provide also depend on the credit score that the borrower owns. Given this case, you need to look upon the interest rates offered by different lenders. Compare the rates from two or more lenders and select the best offer. Focus on the interest rate and the loan terms and not just on the monthly payments.

The loan term

Another factor that directly affects the interest rate of a car loan is the loan term. Always bear in mind that the longer the term is, the lower the monthly payments involved. However, you might end up paying more on the interest with this type of loan. Short term loans on the other hand have higher monthly payments but the payments are relatively low compared to short term ones. In addition to this, a short term loan allows you to pay the loan off earlier.

The credit history

Your credit history is the primary basis used by lenders in calculating the interest rate tied to the loan offered to you. The interest rate of the loan would probably be lower when your credit score and is also higher when the credit score is low.

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