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Auto Finance Tips
Credit Tips
Getting the Best Rates on Your Car Loan
By Warren Clarke, Automotive Content Editor
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If you're about to apply for an auto loan, there's something you should know:
Rates offered to you by different lenders may vary not just a little, but a
lot. Your understanding of your own credit history, and of how credit-related
information is interpreted by lenders, can play a big part in helping you get
the best deal possible.
With that in mind, here are a few tips that'll help you nab the most
favorable auto loan available:
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Obtain a copy of your credit
report. It's important to know what's on your credit report long before
you apply for a car loan. Make sure that the information it contains is
accurate. If errors are found, contact the credit bureaus and have them
corrected.
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Get your credit score.
Credit scores are available online from each of the three credit bureaus: Trans
Union, Experian and Equifax.
The credit bureaus charge a small fee for allowing you to access your score,
but it's well worth it; knowing your score provides you with information that
could save you a lot of money in interest charges.
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Target prime lenders first. It's best to try to obtain credit from a prime
lender, since the rates offered by these grantors will tend to be dramatically
lower than those offered in the subprime category. Different lenders have
different ways of evaluating your score; never assume that you're subprime
just because your score isn't perfect. If you're a member of a credit union,
it may suit you to get your loan from them, since their rates tend to be lower.
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Investigate the tiers. Speak with loan officers at the banks you're
considering regarding their credit tiers (usually rated as A, A-, etc.) and
how they correspond with credit scores and interest rates. Get copies of the
appropriate matrices on paper; they'll prove invaluable in helping you get the
best deals.
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Finally, remember that a cheaper loan is always just around the corner. If
your credit is such that you're forced to pay higher rates on your auto loan,
take heart; timely payments on your loan, and careful attention paid to the
overall state of your credit, can help vault you to prime status in as few as
two or three years. At that point, you'll be in a position to refinance at a
cheaper rate.
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