Those interested in securing a new car loan require carrying out some research in order to get the best possible deal. It is common practice for all the dealers to claim to have the best rates of interest. However, discrepancies among the lenders exist, which makes it necessary to make comparisons before making the final decision on the specific lender to use.
It is important to point out that the auto loans that are advertized are not easily obtainable by the average kind of client. This is because; every detail must be perfect for one to meet the requirements. Some of the details considered include:
• The income to debt ratio
• Credit ratings
• Employment stability
• Open kind of credit account
Further to this, in order to qualify for a new car loan, one has to purchase the specific model that the dealer has targeted. This is a limiting factor for most buyers who would like to have a wide choice. The reality is that it is hard to identify the best car loans by totally believing the dealer advertisements.
One’s credit union or bank can sometimes provide one with the best car loan quotation. Many lenders will allow you to apply for a car loan online with most of them responding in a very short time. It is important for one to make comparisons of different offers before making the ultimate decision. The internet is the best platform to get several quotations. There are several sites that can assist one in comparing rates.
Since not all of the lenders of new car loans are registered, one may have to visit a good number of websites and get further information on the organization and its operations. The procedure may sound tedious but it only takes a little time to view each site keenly. The best new car loan is the one that fits right in to one’s budget.
"I have a car loan with 3% interest!" "That's nothing, I have a car loan with ZERO interest!" If you have ever heard others brag about their super-loan car loan interest rates, you might wonder where how they got so lucky. The truth is, the car loan interest rate by itself means nothing. Here are some reasons why some people get better car loan interest rates than others.
1) Better Credit
Make no mistake about it, in most cases having great credit can mean you will get a lower interest rate. Those with great credit have shown that they are worthy credit risks, and are accordingly rewarded with lower car loan rates. Those with bad credit will have higher rates in order to make the loan more profitable. The lender views bad credit as higher risk, therefore to offset the risk they will raise the interest rate. This way if the buyer defaults on the loan, the lender can still make some money.
2) New Cars vs. Used Cars
Another factor to consider is whether the individual is buying a new car or a used car. If they are buying a new car, there's an increased likelihood of getting an outstanding interest rate, even with so-so credit. This is because the financing for a new car can come directly from the car manufacturer, and as such they have the flexibility to offer zero interest, because they are still making a profit off of the car. Keep in mind that if you elect to go with a zero interest car loan at the dealer, it's very likely that you'll end up paying the sticker price on your new car or close to it; there is very little wiggle room on the price when you opt for a zero interest car loan.
3) The Source of the Loan
If you think all loans are equal, think again! Interest rates can vary greatly among lenders, so be sure to shop around to find out who can give you the best rate.
Bottom line, while a low interest car loan is usually a good thing, you need to look at the whole picture, such as the length of the loan, the type of car (new or used), and where that loan originated from. Knowing these factors will allow you to determine whether you truly got a good deal on your car loan.