Buying another car is something that people often like to discuss. Even if it is a used car, it is new to you and you want to show it off a little. It would be even better, though, if you could say that you got the car for a good deal. Here are some tips to help you get that good deal on your low-APR (annual percentage rate) used car loan.
Be wary of loans from car dealers
If you are not careful when dealing with a used car dealer, you will find that they often find ways to add money taken off the price back into it again. Even if you do end up getting a good discount, you may lose that savings on the interest of your used car loan. This is why it is very important to look for low-APR used car loans.
Seek independent financing for better car loans
The source of your auto loan financing will largely determine the interest rate you receive. If you obtain your financing through the car dealer, you are almost sure to pay higher interest rates than you would at other independent sources. Your own bank will likely be able to give you excellent terms, so be sure to talk to them first.
Need good credit to get a low-APR used car loan
In order to get the best car loan interest terms possible, you need to ensure that your credit score is in good shape. Get a copy of it, and then read it carefully to ensure that there are no mistakes recorded that will lower your credit score. If there is a problem, be sure to have it corrected before applying for a car loan, and then wait about a month to make sure that the corrections have been made.
Consider alternate sources for a car loan
Quite possibly the best low-APR used car loans could be made from borrowing money from your home’s equity. Both types of loans, a home equity loan and a home equity line of credit (HELOC), will give you lower terms than regular car loans. You also may be able to take the interest rate off of your income taxes. If you have loan terms of more than 36 months, it is probably better to ensure that you get a home equity loan with a fixed rate rather than one with a variable rate.
Apply online for lenders with low-APR used car loans
Many places today offer car loans with very low APR. You can apply for them quickly and get a response within about an hour or less. Before you sign any loan agreements, however, be sure to read the document first, and ask questions if you do not understand parts of it. Even if multiple lenders are willing to give you a good loan, you simply only take the one you want.
Shop around for better prices
Before applying for an auto loan, be sure to know what you can afford to pay per month. A dealer may not care about your finances so much, so they may try to get you into a loan situation you cannot afford. Use a car loan calculator to experiment and know how much your payments will be from the beginning. Be careful to watch out for loans that have pre-payment penalties.