If you are thinking about applying for an auto loan to finance the purchase of a new vehicle, you should know that the terms of your loan can have a huge impact on how much you ultimately pay for your vehicle. For instance, even a small increase in your interest rate could increase the overall cost of your car by hundreds or even thousands of dollars. That is why it is so important to ensure you are getting the best possible auto financing terms available. The three tips you will find below can help you accomplish this goal.
Tip 1: Take The Time To Save A Larger Down Payment
If you are not in immediate need of a new vehicle, you may want to consider postponing your purchase until you have been able to save a larger down payment. The reason for this is that the more money you can put down towards the purchase of your new vehicle, the less risk the lender will be taking by agreeing to finance the remaining balance. Since lenders often base loan terms on how much risk they are taking, the ability to lower this risk factor by making a larger down payment can result in more favorable loan terms for you.
Tip 2: Ask Someone With More Established Credit To Cosign On Your Loan
If you have a relatively short credit history, you may find it difficult to secure favorable loan terms. In this situation, you may want to ask a family member or friend with more established credit to cosign on your auto loan. Adding a cosigner to your loan application will allow you to take advantage of their positive credit history while also improving your own credit by making on-time payments each month. Once your credit history has improved, you will be able to refinance your loan without a cosigner if you choose.
Tip 3: Consider Purchasing A Brand-New Car Rather Than A Used Car
In many cases, simply choosing to buy a brand-new car rather than a used one can allow you to enjoy more favorable financing terms. The reason for this is that while used car loans are often processed through third-party lenders, brand-new car loans are often made available through either the car manufacturer or dealership. Since these lenders are more invested in the sale of the vehicle, it is common for them to offer unique auto-financing opportunities such as no money down or zero percent interest financing. These types of financing opportunities are rarely made available for the purchase of a used vehicle.
Reach out to a company like On-Trac Auto Sales to find out more.