(Guest Post by Renee S.)
Purchasing a car can be very expensive, especially if you are purchasing a new car from a dealership. Because the price that is paid for a car is so high, you will want to make sure that you are getting the best rate possible for your car loan. Having a lower interest rate assigned to your car loan could result in savings of hundreds of dollars over the life of the loan. There are a number of ways to increase your chances of getting the best rate on your car loan, but here are the ones that seem to be the most effective.
Increase Your Credit Score
The best car loan interest rates are typically reserved for those borrowers with the highest credit scores. If you want to get the best rate possible on your loan, increase your credit score as much as you can before you begin applying for a car loan. There are many different ways that this can be accomplished, but the simplest ways are to pay down your outstanding balances as much as possible and examine your credit report for errors that can be removed. These actions can result in a quick, dramatic increase in your credit score, which will qualify you for a lower interest rate on your loan.
Get Pre-Approved
Another way to effectively reduce the interest rate for your car loan is to get pre-approved for the loan before you begin shopping for the car. In many cases, outside lenders have better rates available than what the dealership’s financial department will offer you. Obtaining pre-approval for the loan will ensure that you will be able to fund your car purchase and you will know exactly how much you will be able to spend. Lenders like Clydesdale Bank have created online application processes that allow you to get pre-approved for the loan that you want from the comfort of your own home.
Shop Around
If you truly want to get the best rate on your car loan, you should take the time to shop around for the best rate. Different lenders have different loan products available with differing interest rates and fees. The first loan that you find may not be the best loan for your situation. By taking your time and reviewing the loan options available to you, you will be able to distinguish which ones would be beneficial to you and which ones are not a good idea. Once you have reviewed the loans, you should choose the one that has the lowest interest rate, the best terms, and is managed by a reputable loan company.