How to Reduce the Interest Rate of Your Car Loan?
When you take a car loan, it becomes extremely easy to purchase a vehicle that meets all your requirements. However, not every car loan is equal, as they all have different rates of interest. Sometimes, the interest rate is extremely high, due to which the car loan is out of your budget.
As a consumer, you don’t always have to accept the financing option provided by the lender or dealership. You have the power to decrease the rate of interest, allowing you to save large sums of money. Here are four ways you can reduce the interest rate of your car loan:
Compare various lenders or dealerships
Just because your bank is giving you a specific rate of interest for your car loan, doesn’t mean that every lender or dealership will do the same. By looking for lenders or dealerships, you will come across different terms and rates of interest. By comparing all of them, you can select one which offers low-interest-rate for a car loan.
Go for a cheaper model
One of the easiest ways to cut down on the interest rate is to select a car with a lower purchase cost. You can select a cheaper model or one without accessories, to decrease the price. For instance, you can avoid getting add-ons such as rust paint, seat covers, or pinstripes as dealerships charge a premium for these features.
Increase the size of down payment
The larger the size of the car loan, the greater the interest you have to pay. Another way to reduce the interest rate is to increase the size of down payment, which brings down the loan amount. Try putting in 20% of the value of the car as a down payment.
Search for auto refinancing
Another option is to opt for auto refinancing, which allows you to reduce the rate of interest. When you make the monthly payments on time, it has a positive effect on your credit score. Once your credit score improves, you can get auto refinancing, which gives you better terms and rates.
These are the four ways you can reduce the interest rate of your car loan. If you want a lender that provides auto loans at low rates of interest, get in touch with TakeTheDrive today!