The ongoing challenge of the most advantageous vehicle loan rates is crucial right now as the economy heads down the pipe. People in many states, especially Florida, Nevada, California, Arizona, Georgia, Michigan and Ohio, are facing massive foreclosures and job losses. How do you find out the lowest cost car loan rate if you live in one of those states and also have the mortgage.
Spending months trying to locate as many lenders as possible and getting quotes from all of them just doesn’t seem realistic when you’re desperate to buy or refinance your car. However, as far as the best auto loan rates depend on the lender, there are some other factors involved that will be discussed in the following paragraphs.
The most important question is how to help yourself get the best car loan rate. The first thing to do is get the latest credit report and credit score from one of the big three credit reporting agencies. Your credit score is one of the primary determinants of the interest rate a lender will charge you for the auto loan. If your score is 600 or less, you will pay a higher rate of interest than anyone who scored 725. If you have recently defaulted on any loans or credit cards, your friendly banker will not be. Friendly when you go to get a car loan. If you have several small credit cards, you can try to pay them off as soon as possible, before applying for a car loan. Every card you pay will help boost your credit score.
Maintaining a good credit score is extremely important when looking for any type of loan. If your score is already clouded, you can try buying a good, solid used car in exchange for a brand new one. This will reduce the amount you have to finance and keep your monthly payments lower.
Another way to get the best interest rate is to get a secured car loan. In a secured loan, you have to pledge a collateral equal to the loan amount. These collateral can be any assets you may have, such as stocks, bonds, jewelry, antiques, your home (which I won’t suggest) and any other property of value that you own free and in the clear. Some lenders that specialize in bad credit auto loans will allow the vehicle you are financing to be pledged as collateral for the loan. Secured loans must be handled with care, as you may lose your collateral if you default on the loan. Although you may get a lower interest rate with a secured loan, you also risk losing any principal you pledged.
The other option for a car loan is an unsecured loan where the bank does not require any collateral. Hard to get if you are sitting on a bad credit report. Secured loans are much less risky for lenders as they can get hold of your collateral in case you default. Because of this, most lenders are willing to offer secured loans at a lower interest rate and to consumers with bad credit problems.
There are now many online lenders that specialize in bad credit auto loans. Do your research, be prepared to honestly fill out an application and you may be on a new or used car before you think it’s possible.