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Are you looking to buy a car soon? Here are a few tips to help you choose a financing solution that best fits your needs.
If you are planning to purchase a car, you are most likely also considering taking out a car loan. If so, below we have provided 7 important tips about auto loans to help you find the best car loan for your needs. This way, you will be set when the time comes to buy your car.
Check your credit score
Your credit score bears the most weight when it comes to determining whether you qualify for lower interest rates. Thus, it is crucial that you know exactly what it is prior to applying for a loan. You can request a free credit report from one of the three major credit bureaus. But you can only do this once per 12 months. This will let you review your credit report and check for any errors that may need to be sorted out.
Seek out shorter terms
If you are in a financial position to do so, consider going for a shorter loan term. By choosing a shorter loan term, not only will the interest rates be lower, but you will end up paying less overall for your car. In addition, you will be on course to paying off a loan and reducing your debt level. In case you can’t manage the monthly loan payments on the car with a shorter-term loan, consider saving up to make a bigger down payment.
Try to make a bigger down payment
Regardless of what car you are looking to buy, a larger down payment usually translates to a lower interest rate. A down payment of at least 20% will get you a lower interest rate. And your monthly payment decreases by about £18 for every £1,000 put down.
Timing is important
When it comes to purchasing a car, timing matters a lot. The best time of the year to make a car purchase is during the month of October, November, or December. And it also matters when exactly. Consider later in the month and earlier in the month as this is when salespeople will be looking to meet their quotas, thus, will be more open to negotiating a lower price.
Pay off taxes and fees
The fees and taxes involved are some of the most commonly overlooked things when buying a car. If possible try to have these settled at the very beginning of the process, and pay them in cash. While this might seem like a minor detail, doing so may help save you hundreds of dollars over the lifetime of your loan.
Refinance and save
There are certain scenarios where refinancing your current loan can save you money. Perhaps your credit score has improved or you just want to reduce your monthly payments. A car finance broker can assist you in finding out if this is a good option for you. Regardless of what your situation might be, choosing to refinance your existing car loan may offer the fastest way to a more desirable interest rate.
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