Individuals who go online in search of a quote for a used car loan rate will find that it is not just a simple “one-size-fits-all” number. The quote you receive depends on your credit history, and on several other factors which we’ll review for you. You’ll have more control over some of these factors than over others.
Credit history:
Obviously, individuals with better credit are going to qualify for lower interest rates. But those with less than perfect credit are not totally out of luck. If you are in this category, you will find that you will be quoted higher for a used car loan rate, but you will almost certainly be able to get financing of some sort, no matter how poor your credit is. Companies still want your business and will therefore endeavor to meet your needs. You may still be able to make a transaction that you will be pleased with by changing some of the other factors that affect your rate (which we’ll discuss).
Down Payment:
The more you pay down, the lower used car loan rate you’ll be able to get. If you have poor credit, or almost no credit record, increasing the size of your down payment is probably the best way to get financing on terms that are more agreeable to you.
Term of Loan:
You can also negotiate the rate down by financing your vehicle over a shorter term. This is a good option for those who do not have the money to make a much larger down payment but who will have the money to make larger monthly payments.
Shopping Around:
This is certainly the easiest way to get a lower used car loan rate, especially if you don’t have the money to substantially increase your down payment or to make the higher monthly payments that are required for a shorter loan. Lending terms and requirements are determined according to which lender you go with and your credit profile. You can’t change your credit profile immediately, but you can select your own lender. The more lenders you research, the more likely you are to get a low rate on your used car loan.
Today you can do all your loan research and applications online, so the process of shopping around doesn’t need to be a hassle. The great modern time saving device: the Internet, enables you to compare used car loan rates from various lenders within the space of minutes, after which comparison you can select your best financing option.
Tip: If your financer offers it, take advantage of the automated payment option. This means that your monthly payments to the financing company will be automatically withdrawn from your bank account on the day of the month you choose. Aside from being highly convenient, this option ensures that there will be no black marks on your credit as a result of late payments, and since the lender knows you will be paying on time every month, sometimes choosing the automated payment option will enable you to get a lower interest rate.
By Laura Hogg