To find the best car loan rates, do your homework! Before applying for a car loan understand what factors determine the rate a car loan lender will offer.
Car loan lenders will quote a rate called the Annual Percentage Rate, or APR. This yearly loan rate includes the fees and expenses of the car loan.
Compare this rate with other lender's rates. Your choice of car loan lenders will most likely be determined by the Annual Percentage Rate offered you.
Once you know your expected annual percentage rate, loan length and the car price, you can estimate your total car loan amount.
Lenders will consider many factors when determining your car loan rate. The size of your down payment can reduce your rate; a larger down payment usually means a cheaper rate.
The type of vehicle you're buying may affect your car loan rate as well. Some cars have higher resale prices, which protects the lender if you default.
Your credit history will assuredly play a large role in determining your car loan rate. Good credit equals a cheaper rate.
Car loan terms often affect the car loan rate you receive. Generally speaking, car loan rates are based on terms of 24 to 72 months. Some car loan rates can be based on terms greater than 72 months for high-end cars.
When you receive your car loan offer, the terms will usually be described as "up to" some period of time. For example: "approved for up to 72 months," meaning your approval is good for any term up to, but not more than, 72 months.
To accurately compare car loan rates look at similar down payment requirements and terms (the length of the car loan). Your car loan terms will depends on your credit history, kind of car you buy and the size of your down payment.
Once you have all of your car loan quotes in hand. Sit down with a calculator and compare their rates side-by-side.
Know your goals for your car loan so you can figure out what works best for you. One loan might offer a great APR but the length will be extremely short, making your monthly loan payments high. If your car loan goals include the lowest possible monthly car loan payment, then look at another loan, even if its rates are higher.
First and foremost, good car loan rates are the result of good credit. If you don't have an established credit rating, don't apply for a car loan until you've been working for at least six months.
Self-employment is especially tricky when trying to secure a good car loan rate. Call an association which supports people who are self-employed to discuss how to get the best car loan rate. If you are self-employed, having a reasonably stable occupation helps secure a better rate.
Wait to apply for a car loan if you have moved in the last 6 months. Most car loan lenders give higher rates if you relocate often. Loan lenders want to be able to verify your address at a minimum and long term residence helps secure a lower rate.
Pay off your credit card balances and check for incorrect information on your credit report. Previous car or home loans with good rates increase your credit rating and helps secure lower loan rates. Usually, credit extended to you on your credit report will lower loan rates as well.
Bankruptcy within the past 3 years makes getting a good loan rate very difficult, as do charge-offs. Lenders specializing in high credit risk loans are your best bet.
Before committing to any car loan, make sure you're getting the best rate by applying to several lenders. Having car loan offers in hand makes negotiating for the best rate much easier!