If you are in the market for a new or used car, it is easy to get excited about your new purchase and ignore auto loan rates. This could be a costly mistake though, as many dealerships and lenders take advantage of unknowing buyers who increase the interest rate, extend the terms, and offer a seemingly low monthly payment. This can be avoided if you are prepared prior to visiting the dealership or speaking with a bank. Follow these simple steps to make sure you arent taken advantage of when buying a vehicle.
First, make sure your credit report is accurate, up to date, and reflects a positive credit score and credit history. If you have bad credit, you may want to wait to buy a new vehicle until youve had a chance to repair your poor credit.
Getting a loan while you have a low credit score will cost you thousands more in the long run because of the auto loan rates. Although they may offer you a reasonable monthly payment, this is typically because theyve extended the terms of your agreement to accommodate the increased charges. If you have a good credit score, they will be able to offer you the most competitive rates that a good score deserves.
Second, do your research on auto loan rates before you go to the bank or the dealership. If you are unprepared, they will get you to focus on the vehicle or the monthly payments, and you may not realize you are being taken advantage of. Speak to a few different lenders and find out what rate you deserve based on your credit score. In the end, you should choose your lender based on two things: that they are reputable, and that the rate is competitive. You may not want to go with the lowest rate because it may be a bank that hasnt been in business long or people have bad experiences with, they may even wind up being fraudulent. Research each and every company you are considering prior to making a decision.
You can also wait for special offers. Many dealerships and banks offer special rates and terms at different times of the year. If you have chosen the type of vehicle you want, go ahead and ask the dealer when they plan on offering incentives, lower interest rates, and specials. Many companies offer 0% interest deals at different times, so try to buy your vehicle during one of these periods.
Lastly, dont make an impulse purchase. Take your time and think things over. If you pull into a dealership with your heart set on driving away in a new car, you are likely to take what they give you and the dealership or loan company will get away with charging you more than someone who took their time and did their research. You can also bring more of a down payment to the table to negotiate a lower rate. Do take your time, think things through, and have your research ready when you go to buy your new vehicle. Auto loan rates can help you or hurt you when buying a new vehicle, so make sure you are prepared before you find your new vehicle to protect your credit in the long run.
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