How to Find the Best Car Loan Rates?

When looking to buy a car, one of the most important things you should pay attention to is the interest rate of the loan. You need to keep in mind that the decisions and actions you take when looking for a car loan, can have long-term ramifications to your financial health. It is because of this that you simply must find the best rate and terms available.

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Make Sure You Negotiate

The Federal Reserve did a survey in 2015 that suggested that 76% of people who bought a new car or truck, had negotiated the price. Amazingly, a more recent survey has shown that this number has dropped to 31.6%, a number that is far too low. After all, if you are not willing to negotiate the loan, how are you ever going to get the best rate? It seems like a simple concept, but it’s one that people are starting to ignore. In fact, the Federal Reserve survey suggested that 11% of borrowers don’t even know the interest rate they are paying on their car loan!

It’s Not the Payment, It’s the Total Cost

The average person will look at the monthly payment, more than anything else. While it is true that the monthly payment needs to fall within the constraints of your budget, the reality is that far too many people take out a loan for a longer period of time to simply knock down the monthly payment. In the end though, they end up paying more for the car than is necessary. If you can knock down the price of the car to begin with, you will find yourself in a much better position over the longer-term.

If you cannot afford the monthly payment without extending the loan for the vehicle to a ridiculously long time frame, you will likely find yourself looking for a new vehicle before the original one is paid off. This is a way to keep consumers in perpetual debt, so you should always strive to knock down the total cost of the car first, then worry about the monthly payment.

Make Sure Your Credit Score is Healthy

Your credit score will have a huge influence on what you pay in interest. The higher the credit score, the lower the interest rate should be. Make sure your credit card balances are paid down, and any negativity on your credit report is addressed. You should begin to look at your credit score much sooner than later when it comes to trying to find aloan, giving yourself months to rectify any negativity, if at all possible.

Shop Around

Unfortunately, many consumers don’t even go online to review the average rates before they talk to a dealer about the financing necessary for a vehicle. It’s a known fact that most car buyers will simply take whatever rate they are offered. Remember, you should keep an eye on who’s interest lines up with yours, and those who don’t. Obviously, the lender wants to get the highest interest rate possible, but they also want your business.As a general rule, you should never take the first interest rate offered to you, unless of course it’s extraordinarily low.

Interest rates are rising in 2018, so it makes sense that the auto loan interest rates are rising as well. Because of this, it’s very important to pay attention to these rates and the flexibility that some lenders can offer, because once the Federal Reserve starts raising rates, even the best deals will start to get a bit more expensive. In a rising rate environment, shopping around is paramount when it comes to financing your car.

Keep in mind that shorter loans also tend to have lower interest rates as well, so if you have the ability to pay off the car in three or four years, that may help as well. Longer-term loans, such as six years, will typically have higher interest rates, and of course, will cost you much more in the longer-term. Just a few percentage points can make a massive difference in how much the cost of the car will be over the long-term.

Remember, They Need You

Unfortunately, far too many Americans believe that they need the financing companies in order to get what they want. While it is true that you need to be financed, keep in mind that these companies should be competing for your business, not the other way around. Car dealers don’t make money if they can’t get you in that vehicle, and you should approach it with that attitude. You should be able to get up and walk away from an offer, because there will almost always be somewhere else willing to go the extra mile for you. Don’t get intimidated, and make sure they know that you are there to negotiate, not simply take whatever they offer you. In the end, it could save you thousands of dollars over the next few years.