When purchasing a vehicle, we take the time to compare the interest rates of different financing sources to get the best car loan deal possible.
Getting a Low-Interest Rate Car Loan
Exploring all the avenues of financing is a necessary step if you want to find the smallest monthly repayment possible and reduce the total amount you owe from the lender. When shopping around for the best car financing option, keep in mind the following strategies because one or two of them might be your key to getting a lower interest rate on your car loan.
1. Don’t Stick to Dealer Finance
Many borrowers choose to purchase their vehicles through car dealers because of convenience. However, they also tend to give higher interest rates or additional fees to cover the cost of the convenience that they provide. So instead of settling with a dealer, go to other loan providers and you are far more likely to get a better offer. We have a more extensive article on why you should avoid dealer finance here.
2. Avoid Zero % Finance
In your haste and excitement to find a low-interest rate car loan, you might get tempted by lenders offering zero interest finance. It sounds good but in reality, you’ll just end up paying more. Zero interest finance loans usually have higher and non-negotiable purchase prices. They also have higher fees to compensate for the zero-interest deal. The best way to avoid this trick is factoring in the overall cost of the loan.
3. Get a Bigger Deposit
A deposit lowers the principal on your car loan. By having a bigger deposit, you also lessen the risk for the lenders so they are more likely to consider giving a lower interest rate. This deposit will also give you higher equity on the vehicle.
4. Negotiate with Lenders
A benefit of shopping around with different loan sources is getting the right information to help negotiate for lower car loan rates. You can use the previous deal offers as a trump card to persuade lenders to go lower. If you have some good negotiating skills, that will help too.
5. Maintain Good Credit History
In every car loan application, credit history is scrutinized to find out if a borrower has been diligent in paying off previous loans. By maintaining a good payment record on your credit report, banks and lenders will not see you as a risky borrower and will be more likely to give you lower interest.
If you are in the market for a low rate car loan, call Finance Ezi now on 1300 003 003 or submit an application online and our brokers will do the research and negotiating on your behalf.