If you’re in the market to buy a new used car and you don’t have enough cash to pay for your new vehicle up front, then you’ll need to get a loan. There are many types of loans and many factors that determine how good of loan you will get. If your credit is good, then your chances of getting a low interest car loan are a lot better. But there are some important things to keep in mind when you set to get that loan.
There are many factors that will determine your interest rate and the terms of your loan. Who your lender is, what vehicle you are purchasing, your credit score and the length of your loan are some of the main factors that will play a key role in the loan you end up with.
Banks, credit unions and auto dealers are more likely to offer low interest car loans to customers who have a high credit score. Interest rates will tend to be higher to those with bad credit. Another thing that will help keep your interest rate low is the length of the loan. Many dealers offer low interest rates on shorter loan terms because this helps them recoup their money faster. However, there are also many dealers and financial institutions that still offer lower interest rates with loans that have longer terms.
What kind of car you are shopping for can also affect your interest rate. Typically, lenders offer lower terms for new cars, and slightly higher rates for used cars. The style and cost of the vehicle can also play a role in what interest rate you get. Lastly, like many big-ticket purchases, it always helps to have a little money to put down up front. The more you pay up front, the less you have to finance. This usually means you’ll get a better interest rate on your purchase.
Everyone wants to get the best interest rate possible on his or her car loan. Determining who you lender is, what vehicle you’re buying, knowing your credit score and the amount of time you need to pay off your loan, can go a long way in helping you achieve that goal.