Car loan interest rates are the cost of borrowing. They are the lender’s cut for lending you the loan and for taking a chance on you. It can seem like rates are all over the places and sometimes that’s true but there are things you can do to be offered the lowest car loan interest rate possible.
Our Kitchener car loan team outlines several actionable ways anyone, with any financial background can attract the lowest car loan interest rate.
Clean up your credit report
All responsible lenders will check your credit report before lending to you so your first task is to make sure your report is 100% accurate. Check it for errors, make sure everything is accurate and have any changes made if you spot mistakes.
Always use automatic payments
A big red flag to lenders is missed payments. They will often ignore a single missed payment as human error but more than one and they will look very closely at your application.
Using automatic payments for all debts should help you avoid the majority of missed payments. As long as there is always money in your account to make those payments, there’s no reason to ever miss one.
Improve your credit score
Your credit score is a reflection of how you handle debt. Therefore, it’s a reflection of how much of a financial risk you are to a lender. The higher your score, the lower your perceived risk.
Do what you can to increase your score as much as possible. Keep borrowing sensible, always pay on time, make sure your credit report is accurate and only apply for debt you want.
Don’t change job too often
Your employment record also makes a difference as to whether you’re accepted for the car loan or not. Change job too often and you look as though you cannot settle, which makes lenders nervous.
Stay in a job for 2 years or more and you appear much more stable and less of a risk.
Manage debt effectively
Having debt is not bad. Having debt you cannot afford is. Don’t be afraid of using credit cards, having a mortgage or applying for a car loan in Kitchener but don’t go overboard.
Keep credit card debt low, use the card but try to pay it off each month. If you have other debts, keep an eye on affordability and pay them off as and when you can.
Having savings in the bank won’t change a lender’s mind about giving you a car loan but it will reassure them that you’re financially secure and have money to cover the loan should anything go wrong in life.
Savings are an essential ingredient in your financial wellbeing and are a good indicator of whether you would be a good borrower or not.
Have any other suggestions for attaining the lowest car loan interest rate?
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!