Don’t get ripped off by lenders! The three tips below will help you to make sure that you aren’t paying too much for your car loan. When making a car purchase, it is your responsibility to make sure the terms of the loan are fair and that you only take on a payment and a debt load that you can afford. The three tips below will help you to make sure that you aren’t being taken advantage of by your car loan.
Three Simple Tips for Evaluating Your Car Loan
What’s Your Rate?
As with any kind of financing, the key detail to look at for your car loan is the interest rate that you are paying on the loan. This is basically the ‘cost’ of the money that you have borrowed, and it can be incredibly expensive if you don’t fight for a good rate. In general, the rates are based on your credit history, along with a few other factors. If you have a good credit score, you should be offered a very fair rate, currently something around 5% or below. Those with less credit history, or marks against their credit, might find themselves in a situation where they are paying 10% or more for their loan. Should you find yourself in a car loan with a double-digit interest rate, look at refinancing options right away to try and save money on a monthly basis.
Use the Internet as an Ally
Information on current car loan rates is readily available on the internet with a quick search. Before you sign on the dotted line for your loan, and your car, make sure the rate is fair. Find out exactly what your credit score is, and use that to determine what kind of loan rate you should be offered. If the dealership or bank is not going to offer you a rate in that range, stand up for your money and either negotiate it down or take your business somewhere else.
Watch Out for Small Loans
If you have a large cash down payment or valuable trade-in to use toward the purchase of a new car, you might find that you only need to finance a few thousand dollars to complete the purchase. The trouble with that plan is that banks don’t like making small loans because they don’t make very much money over the term of the loan. Because of that, you will find that the interest rate you are offered is much higher than if you were borrowing more money. Rather than sign off on a high rate, simply wait a little longer to purchase the car until you have enough cash saved up to just buy it outright.