Low interest auto loans are a great way of getting a car that fits your budget and will turn out to be a good investment in the long run. Most people want to be able to get a car using a loan that has a low interest rate, leaving them with enough financial padding to take care of a variety of life’s future financial commitments.
These loans give them a unique opportunity that includes taking out a loan and paying it back in installments, at a fixed rate agreed on by both parties – the financial institution that lends the money and the customer. Let’s have a look at a few tips that will help you in getting an auto loan with a low interest rate.
Getting a Car Loan with Low Interest
The first thing you need to do is carry out some research. This includes talking to friends, visiting financial institutions and looking at internet search results to see what is available. There are numerous online auto lenders that have a good reputation when it comes to getting a low interest auto loan.
To get a low interest rate, you really need to be getting a car loan with good credit. Your credit is the primary point of reference that most financiers refer to. What qualifies as good credit score? Let’s have a look at a simple score breakdown:
- A credit score of 850-740 is considered as an excellent range, and can qualify you for an interest rate of 3.2%.
- A credit score of 739-680 is considered as an average credit score. You can get a loan with an average interest rate of 4.5%.
- A credit score of 680 and below is viewed as a Sub-Prime credit score, and can get you a loan with an interest rate that ranges between 6.5-12.9%.
You should always aim to have an average to excellent range credit score in order to qualify for these low-interest auto loans, as shown by the figures above.
Low Interest Dealer Financing
Another option when it comes to getting a low interest car loan would have to be at the car dealership where you intend to purchase your car. It helps not to get committed to one dealership before looking around at what others are offering. Some even offer special manufacturer incentives such as 0% auto loans; however, you must have nearly perfect credit to qualify for such offers. The rule of thumb here is go for a loan that can be repaid in 36-60 months, as you will pay less interest in the long run. Remember, the interest rates for most of these loans are not fixed and are negotiable.
Home Equity Loans – for Cars?
Yet another option when it comes to getting a low interest auto loan would be to take out a home equity loan. Your house acts as security, which drives down the interest rate. You may also be able to get a lower interest rate thanks to your income tax bill. With these and various other options available to the ordinary buyer, your preferred car becomes a viable reality that will take a few months to a year to achieve.