Are you in the market for a new car? Then it’s time to discover how to get the best loan interest rate when financing your new vehicle. There are ways to ensure lenders offer you the best rates possible and it all starts with these three things.
Your Credit Score
If you don’t know your credit score, then you’re not ready for a loan. This has a huge impact on how much interest rate you pay. Lenders consider buyers with a high score less risky than someone with a low score. Therefore, they will offer you a lower rate if you have a high credit score.
Lenders look at your income and how much you owe to determine if you are a high or low risk for the loan. If your debt is almost equal to your income, you’re considered a higher risk and your interest rates will go up. On the other hand, if a large portion of your income is free, lenders consider you a more reliable borrower.
Amount and Length of Loan
In most cases, the more you borrow and the longer your agreement runs, the higher the interest rate. For this reason, it’s good to make the largest down payment you can and opt for the shortest term agreement that fits into your budget.
Knowing what lenders look at to determine your interest rate gives you a little more control over how much you pay. For example, when you know you have a high credit score, you can negotiation for a lower rate. You may also want to take time to save more money for the down payment or pay off a few debts before applying for the loan.