Buying a car is a major personal or family decision. It involves a hefty investment and it can be quite intimidating especially if it’s your first time. Regardless of whether you are purchasing a car through a new or used car loan, you need to spend time to research the best vehicle for your budget. This means getting the car with the best features and finding the best deal for it as well.
When buying a car through financing, you should be able to differentiate good car loan practices from abusive ones. This will allow you to avoid high interest rates. Here are some quick tips that can help to make you secure a car loan with low interest rate:
Check Your Credit Report
Before going out to start looking for a car, you should check your credit report to ascertain your credit standing. This will also give you an idea of your creditworthiness and inform you about any shortcomings in the past or if you have been a victim of identity theft. Having a clear idea of your credit report can help you know what financing schemes work in your best interest.
You should be advised that a credit report is a free service available only at annualcreditreport.com. Do not deal with paid credit services to avoid unnecessary expenses.
Get a Quote from Your Bank or Credit Union
Your credit report will give you an idea what type of car and price range is suited for you. Once you have this in hand, you may go to your favored bank or credit union to find out their interest rates on car loans. In some instances, the bank will pre-approve you and inform you how much you have to pay monthly if you let them know the specific type of vehicle you want to purchase.
In order to get a good deal, you should visit more than one bank to shop around for rates. Get at least three to four quotes to find out who’s offering the best deal.
Negotiate for a Lower Interest Rate
Banks, credit unions and financing institutions such as the auto loan services Colorado car buyers prefer are known for their car loan and financing services. But ironically, 80% of car buyers allow car dealers to finance their vehicle. It is not however known if it is due to the convenience offered by the dealers or the customers are simply carried away by their marketing tactics. If an agent takes you to a car dealer’s finance department, you should keep yourself armed with your credit history and the interest rates offered by banks. This can help to make you negotiate for the best possible deal.
Most car dealers offer add-on products when someone buys their car. These products come in the form of auto insurance, service contracts, and life or disability insurance. These products are overpriced and sometimes unnecessary. But if you think they are useful to you, you should buy them from the right sources outside the dealership.
photocredit for featured image: TuRbO_J (flickr.com)
Lori Palermo is a corporate consultant who is experienced in the areas of fund administration, corporate solutions, human resources, technology and small business. He likes to share his knowledge about business and human interests. .