Is it Possible to Get Lower Interest Rates on Car Finance?Just like any type of financing, there is always room to negotiate when it comes to interest rates. However, the ease or difficulty in scoring a lower interest rate will come down to a variety a factors. And it’s important that you consider them all because what may appear to be just a fraction of a percent, could save you hundreds – if not thousands – over the term of the loan.
Before you buy
Ideally, you want to secure the best interest rate before you’re committed to your car purchase and locked into a loan. That way you don’t have to worry about going through the process a second time, and don’t risk too many enquiries on your credit file. In order to secure the lowest interest rate before you buy, you have to understand where you stand on the ‘ideal customer’ risk scale for a bank.
If your credit history is poor, you have a lot of other commitments, or perhaps unpredictable income – negotiating a lower interest rate could be challenging.
- Your credit score: Take a good honest look at your credit file and credit score. Those interest rates that you see on banking and comparison websites are always the lowest possible rate – but you may not be eligible for it. How good, or bad, your credit history is will greatly sway where the needle lands on how much interest you’re going to be charged on your loan.
- Your finances: Next up, what is your financial situation like? Do you have a lot of other loans, or perhaps you’re self-employed? If you already have financial commitments to other lenders, or perhaps have income that’s hard to verify, lenders will – in their own way – ‘penalise’ you for that with a higher interest rate.
Refinancing after you buy
Whilst you will have to do paperwork again if you already have a car loan, it’s better to fill out a few forms than pay way more than you should be! Perhaps your situation has improved since you got your car loan, or maybe the interest rates have dropped, or maybe you’re just tired of the high payments you’re seeing leave your account each month?
- Cancellation fees: Before you do anything, you need to consider if any cancellation fees will be incurred. Because if the cost of refinancing is too high, it could make the savings from the new lower interest rate pointless.
Negotiating the lowest interest rate
So what should you do? Irrespective of if you’re applying for a new loan, or wanting to refinance an existing one, to ensure you get a lower interest rate you really should speak with a broker.
There’s a lot to consider and you don’t want to misstep when you’re dealing in the world of car finance and credit. One false move could cost you a lot in the long run..
Thankfully though, using an experienced finance broker will give you the peace of mind you deserve. How? Because they look at all those variables with you, and have the ability to search and source out the lowest interest rate for you before you even apply.
If you want to check if you’re currently paying too much interest, or access at your credit file and credit score pick up the phone 1300 301 051 or contact us here for an obligation free chat today.
DISCLAIMER : The thoughts and opinions conveyed on this website are those of the authors only and are of a general nature. This does not constitute financial or general advice to you from Auto Loans Group. You should seek your own independent advice from a professional which is specific to your circumstances before considering any of the items referred to in this article, including finance, insurance, and car buying.