As we all know, borrowing money to buy a car is not cheap. But, there are ways in which you can get a good interest rate on a car loan for a daily driver or classic car.
Shop Around For The Best Interest Rate
Should you take out dealer finance? Many of us take out dealer finance because it is easy. That is probably true, but dealer finance is not cheap. Think about it this way. Your car dealer earns a commission on selling car loans. Who do you think pays for that? Yes, that is right. The customer pays extra for the privilege of letting the car dealer earn more money out of the deal.
The best thing you can do is to try your bank or an independent lender. You should always shop around before you sign on the dotted line of any loan agreement.
Make A Larger Down Payment
Another way to reduce the amount of interest payable on the loan is to make a larger down payment. You can also negotiate a better part exchange for your old car.
In general, borrowing a lower amount of money means you can pay it back faster. Doing so will help you to reduce the amount of interest you pay on the term of the loan.
Check Your Credit Score
Before you take out a car loan, you should check your credit score. If your credit score is already good, you have nothing to worry about when it comes to borrowing money. However, if it is not so good, it is best to see if you can clean it up a bit. It pays to plan ahead before you buy a car. If you know that your credit score needs a helping hand, shop around for the best deal, or ask the credit agency how you can improve it.
How to get a good interest rate on a car loan is not complicated. It is about thinking and planning ahead. After all, for most of us, a car is a major investment.