You’ll probably be shocked to know that Americans owe roughly $1 trillion on their cars. With all that auto debt floating around, it’s important to make sure you get the best auto equity loan rate.
Otherwise, you could wind up becoming another statistic and getting stuck with whopping loans! The good news is, there are a few things that you can do to make sure you get a great auto equity loan.
If you’re interested in learning not only how to get an auto equity loan but how to get the best auto equity loan, we’re here for you. Keep reading for these tips on finding a better-than-average auto equity loan rate!
The first key to finding great auto loans is to get in touch with your credit history. Many of us have no idea what our credit history actually looks like, despite the fact that it’s a huge factor in tons of different financial decisions.
The reason why knowing your credit score is so important is because your credit score is one of the prime factors that dictate whether or not you’ll be able to take out a car loan. In general, when you have a higher credit score, you’ll have a lower loan rate.
There are plenty of different places online where you can check out your credit score, and most of them are free. You can get your credit report from one of the three major credit bureaus once a week, as well as sign up for applications that help you track and improve your credit.
Most lenders have a minimum credit score, and knowing what that score happens to be is a big part of customer education when shopping for auto loans. For most dealers, your score should be between 650 and 700 to get the best rates.
If you have a lower credit score than 600, you might want to consider working to raise it before you apply for a loan. You can do so by paying down debt, making on-time credit card payments, and avoiding taking out new credit applications.
Doing so can help save you huge sums of money. The better your credit health is, the more likely you are to get a great rate for your auto loan.
Another pro tip for finding the best auto loan rates is to do your homework. That means taking the time to research different auto loan options and figure out which is the best choice for you.
The reason why this is especially important when looking for lending services is that there are tons of different options out there. You’ll need to carefully look into what financing options make the most sense for your situation and which companies offer you the best rates.
When you’re researching auto loan companies, you’ll need to pay close attention to a few different factors. For one, you should check out the interest rates and repayment terms. You should also look at possible loan penalties and required down payments.
Remember that when doing your research you should take the time to read auto equity loan reviews. Doing so can help you get a better idea of what working with a certain company is like as well as how trustworthy the team is.
One major mistake that customers make when seeking out an auto loan is to look for the lowest monthly payment. And, while low monthly payments are great for managing your monthly budget, they’re not so great in the long run.
The reason for this is that many lenders will prolong the car loan replacement method and hype up low monthly payments. That makes the loan more appealing to customers upfront but can end up costing customers a bigger loan over time as they end up paying more interest.
You should only ever think about the monthly car payment if you’re privately looking into what you want to spend on your vehicle. Aside from that, you shouldn’t consider monthly payments but should instead focus on the total car loan amount.
When you apply for a loan, creditors issue a hard inquiry on your credit. Hard credit inquiries affect your credit score, making it extra important for you to be careful when shopping for car loans.
The good news is that the FICO system lets you shop for car loans for a period of 14-days. They’ll count all credit applications within that time as a single inquiry, causing less impact to your credit score.
On top of that, many auto lenders have prequalification systems that will help you view potential loans, interest rates, and payments before you make an inquiry. That way, you won’t affect your credit score before you’re ready to take out a loan.
When you apply for car loans, make sure to limit your shopping to a two-week period. Otherwise, you could wind up paying for it via your credit score.
After you’ve researched different auto loan teams, you should come up with a shortlist of the lenders that you liked the most. From there, it’s time to start comparing each lender’s pricing.
The easiest way to compare quotes between lenders is to get a few different quotes from various companies. Many times, the lowest APRs these teams list on their websites aren’t an accurate reflection of what your actual APR will be.
Compare any preapprovals that you have and make sure that they’re still valid. Otherwise, request new preapprovals and use those to compare which auto lenders offer the best rates.
When comparing quotes, just make sure to keep an eye on both the repayment terms and the APR. You want to make sure that you’re paying as little interest as possible over the course of the loan.
Speaking of shopping around, one pro tip for getting the best auto loan rates is to shop around without actually inquiring. What that means is don’t let the salesperson tell you that they’re providing you with the best offer on the market.
Each lender has a different way of assessing its interest rates. Some lenders base rates on the primary lender while others base them on the car you’re buying, which means you can get some pretty varying rates.
When looking for car loans, start by simply shopping around and getting a feel for how the company assesses its loan rates. Look into what each company has to offer you before requesting any prequalification or quotes.
When you get car loan quotes, you’ll find that you’re stuck with a mound of paperwork to sift through. It can be tempting to skim the paperwork just to get the reading over and done with.
However, it’s extra important for you to read the fine print on your auto loan quotes. The auto loan is a legally binding agreement that will affect your credit for years, making it extra important to know exactly what you’re signing up for.
Pay extra attention to the prepayment penalties as well as any binding arbitration. Binding arbitration removes your right to take the lender to court if things go wrong, while prepayment penalties are charged if you pay off your loan early.
Knowing these details and restrictions could seriously affect how much you end up paying on your total loan. That’s why taking the time to read the fine print is especially important when getting auto loan quotes.
There are tons of different car loan brokers out there who have access to tons of different lenders. And, oftentimes they have access to brokers that you wouldn’t necessarily look into on your own.
In order to make sure you’re getting the best auto loan rates, you can try working with a car broker. They’ll be able to get you quotes (and good ones at that) much faster than you would be able to if you were shopping around on your own.
This is partly because car loan brokers apply for tons of different loans at a time. That means that they can often secure you lower interest rates thanks to their experience in negotiating loans and identifying lender criteria for each situation.
On top of that, brokers have a higher chance of finding loans you’ll actually get approved for. They can look at loans that are specifically matched to your situation, ensuring that you’ll actually be qualified for the loan at all.
Finally, car finance brokers eliminate the guesswork that so often goes into comparing car rates. They understand the many policies and guidelines set up by car lenders and are able to get everything right the first time so that you can get the best possible car loan proposal.
Many people don’t realize that they have bargaining power in their car loans. After all, they’re the customer, and the car loan company ultimately wants to close the deal and get money from the sale.
Because of that, one thing that car loan providers tend to do is to offer slightly higher car loan rates upfront. Rather than getting you the best deal right away, they’ll offer higher rates in the hopes that you’ll simply accept what you’re offered.
One way to get around this is to ask the dealer to lower your car loan’s interest rate. In the eyes of the company, even though they’ll be losing a little bit on your interest, they’d rather close the deal than lose a little profit.
When looking for auto loans, keep your bargaining power in mind, and don’t be afraid to use it. Ask your potential lenders if they’ll match lower quotes or if they can get you any special deals on your loan.
One great way to lower your auto loan is to make a large upfront deposit. The bigger deposit you can make at the start of the loan, the bigger discounts you’re likely to get on your vehicle overall.
One reason for this is that when you can make a bigger upfront deposit on your car, you’ll need to borrow less money for the vehicle. That means that the lender is at a lower risk for selling you the loan.
When that happens, you’ll not only find more car loan options available to you but could also wind up with discounts on your loan. That’s why committing a larger amount of money to your car purchase upfront can be a great way to get a good deal on your auto loan.
Although your credit score is certainly important in getting an auto loan, it’s not just the number that businesses look at. Auto financing companies also pay attention to your payment history.
That means that they’ll look at any previous loans you had and see how your repayment went. They’ll look to see if you paid your loan off early, if you had late payments, or if you ever defaulted on a loan.
These types of factors tell the company whether or not you’re a responsible borrower. The more responsible you are with your loan payments, the more likely the company is to lend you the money for your auto purchase.
As you can see, finding an auto equity loan is tough. And, since roughly 85% of cars are financed, it’s extra important to make sure you get a great loan rate.
The good news is that with this guide, we’ve made it easy for you to get the best auto equity loan. You’ll have no problem navigating the waters of car loans and finding one that fits your needs and your budget.
Speaking of finding the best auto equity loan, we’re here to help! Get in touch with our team and we’ll get you hooked up with the best car loan services on the market.