Best car loan rate
One is bombarded by attractive advertisements of easy financing and the availability of various models of cars. Never has the buying of a car been made easier, or so it may seem. However, it is not easy to get best car loan rate on account of the deals between the car dealer and the bank.
What is a car loan?
A car loan is the cash that is given as a loan to the car buyer by a financial institution.
Calculation of interest:
The amount of loan that a car buyer applies for is called the principal amount. A time period is worked out for the repayment of the loan. The longer the time period, the lower the interest rate, while shorter time periods mean higher interest rates. The interest is calculated on the total amount to be paid back in the time period decided upon. The monthly instalment plan is then worked out for the car buyer.">"> The loan and the interest on the loan depend on:
Individual credit analysis
The principal amount
The time period for the repayment of the loan
Age of the car
Thus, the total amount that has to be cleared is the principal amount plus the amount of interest.
Deciding on the car that you want to buy:
Besides, of course, your interest in a particular model of a particular brand of car, you have to see how you can get the best car loan rate. Since interest rates are different for different cars, it would be a good idea to check out a few other models that you might like to have. This way your range is not limited to just one car. It would be wise to get quotations on all the cars that you have short-listed, from different dealers and different banks. Also, it is important for you to know how much you are willing to pay cash down.
The difference between the amount of cash you are willing to pay and the cost of the car will decide the loan you will have to take. Next, the financial metrics will have to be worked out, so that you can choose the financial plan for the best car loan rate that would suit you the best. Some dealers give cash discounts. Negotiate to have these cash discounts adjusted against your down payment.
Online shopping:
Shopping for cars online guarantees the best car loan rate. It is also easier to research financing companies, negotiate terms for getting the best possible and lowest interest rates and terms of payment. Try to negotiate with at least 5 banks/credit unions (which incidentally have very good rates as well as superb customer care service), or even private lending companies.
Points to remember:
While thinking about how to get the best car loan rate, it would be good to remember that if you have high credit scores, the loan rate on your car is automatically lowered. Another point that would lower the loan rate is if you have a co-signatory.