| Before you buy a car it would be a good idea to check out what the current interests rates for new cars are in your area. Call around to different lenders and ask the people at your local bank branch what percentages they are offering.
Unless you have been saving your money for a while, you will need to finance your purchase with one of these lenders. Banks and other lending institutions compete for car loans and strive to provide good interest rates for new cars for well-qualified applicants.
The loan you get will be secured by the car you want to buy so the bank see this as less risky then, say, a signature loan where there is no collateral. If you default on the loan, they get the car. Most banks or other lending institutions offer car loans that range from twenty-four to sixty months.
A car loan provides you with a method of getting the car you want now and then paying for it over time. You can negotiate a good interest rate on a car if you have stable income, excellent credit and have made timely payments on previous car loans.
Your best bet is to have a good, long-standing relationship with your bank so they know you and can trust that you can and will make your payments on time. There are some things you can do first before approaching them to ask for a loan. If you do your homework they will see that you are also knowledgeable about all aspects of buying a car.
Do these things first:
1. Review your credit data thoroughly. Obtain your credit score, as well as a copy of your credit report. Visit websites such as Annual Credit Report and myFico to get your credit report. Dispute any incorrect items with the reporting credit bureau. If you win the dispute they will remove the incorrect item and you may just improve your credit score by doing so.
2. Check the interest rates for a car loan at financial institutions where you currently have a banking relationship. Inquire about interest rates from your bank, credit union or credit card company.
3. Use your membership in organizations such as AAA, Sam's Club, Costco's or BJ's Wholesale Club to find the best rates for car loans. Contact the respective member services departments to ask about details on member's only specials on auto financing.
4. Go to the car dealership and ask to speak to someone about financing. Take along your credit report, credit score, and the list of the other lenders you have spoken to and the interest rates they have offered. Compare dealer incentives and the interest rates offered by car dealer against your research to see where you can get the best deal.
5. Select the most affordable term for your car loan. Considering most banks and auto lenders provide lower interest rates for shorter terms. Choose a four-year term instead of a five-year to term to get better interest rates for new cars. |