Consumers might be tired of hearing about the importance of doing their homework, but the truth is that spending a few minutes on research can help them save a ton on car loans. While picking the make and color of a new car may be fun, savvy consumers start by comparing payments and rates on different car loans. Low interest rates on car loans translate to lower monthly payments, but there are a few other car loan tips that car buyers should know.
- Make sure you have a budget in mind before you go to the car dealer. Salespeople are trained to encourage you to upgrade to a more expensive car or to add options that will boost your costs.
- Compare monthly payments at different rates so you will have an idea of how much your car loan will cost.
- Consider applying for car loans with lenders other than the dealership so that you can negotiate on the car price as if you are a cash buyer.
- Make sure you know current interest rates on car loans so that even if you work with the dealer on financing, you will be better prepared to negotiate.
Qualifying for the best interest rates on car loans depends significantly on your credit score. Find out your credit score before you go to the car dealer so you know whether you qualify for the lowest rates. Some less-than-scrupulous car dealers may tell you that your credit score won’t qualify you for the best interest rates, so knowing your score can strengthen your negotiating ability. If your credit score is 740 or higher, you are in great shape. If your credit score is lower than 700, you may want to take some steps to boost your credit score before applying for a car loan. Fix any errors, pay down your balances and pay your bills on time.
If you are eager to buy a new car, taking these extra steps can make the difference and help you qualify for the best car loans.