As the cost of buying a car can be so high, many people need to take out loans to pay for it. While the cost of the loan itself may not seem like much when you are buying an expensive car, it can add up quickly. If you want to save money on your loan, then you must take the time to learn how to get the best interest rate on your loan. This is because even a small difference in interest rates can mean thousands of dollars of savings over time.
Shop around
Our first tip for getting a great car loan rate is to compare the interest rates of multiple lenders. You can do this by visiting a few different car loan providers and checking out their rates. You mustn’t stop there though, as it is also vital for you to check the terms and conditions before signing up for a car loan. You can also use a car loan calculator to get an idea of how much a loan might cost you in monthly repayments.
Make higher monthly payments
Another way to lower your car loan interest rate is to always pay more than the minimum monthly repayment. Often, borrowers will sign up for loans that come with a set monthly repayment. While this may seem like it makes life easier, you need to remember that the less you pay back each month, the more money you will end up paying in interest payments. If you can afford to pay more than the minimum payment on your loan, then it is worth doing so as this will save you money on the cost of your loan over time.
Take your time
Our second tip is not to rush the process. While you may be eager to buy your new car, you must spend some time researching before choosing a loan. This includes finding out which lenders offer the best rates on car loans, as well as whether or not they have any hidden fees or extra costs attached to their loan deals.
Limit your borrowing
Instead of taking out a large loan, it is often more beneficial to take out a smaller loan and make larger monthly repayments. This is because the less you borrow, the lower your interest rate will be. By making big repayments early on in your loan period, you can reduce how much you end up paying overall on the interest of your loan.
Consider all your loan options
Our final tip is to consider all of the loan options available to you. If you’re eligible for a secured loan (normally these are used for new cars), then you’ll be able to access a lower interest rate than if you had taken out an unsecured loan.
Another option is taking out a personal loan if you are not able to get approved for a car loan. Personal loans can sometimes have lower interest rates than car loans, which means that you might end up paying less in interest if you choose this option instead. This can be particularly beneficial if the lender doesn’t check your credit rating.
You can also look at car loan options specific to your city, like if you’re living in Melbourne you might want to search for ‘car finance Melbourne’.
