Although there are a lot more auto loan providers today which we can easily get some good deals from as compared to ten or twenty years ago, nevertheless there are still some crucial factors which play very important role in determining the car loan interest rates. If only these key factors are taken into consideration and adhered to, we may at least get approximately 90% confident level on the interest rate which you will be offered by the auto loan provider.
Here are some of the key criteria which you may want to keep behind your mind when it comes to car loan,
1. The type of car that you are buying – New car versus used car. Normally a used car will be charged a higher interest rate as compared to a new car. And a very used car will be charged an even higher rate if the loan is approved. In some cases, the bank or the finance institutions may not even approve the loan for a very old car.
2. The length of the loan tenure -The optimum length of car loan repayment would be 48 months, although some loan provider do offer up to seven years of loan tenure to help those who is unable to pay a higher monthly repayment amount. As the rule of thumb, the longer the loan tenure period, the higher the loan interest rates.
3. The credit status of the applicant – borrowers with better credit standing will be liable for a lower auto loan interest rate because they have been perceived to carry low risk in defaulting their auto loan payment as compared to another applicant with a low credit score. Therefore it is highly imperative for all of us to make sure we have good and healthy credit score when it comes to any loan application as it will make a lot of differences in terms of the interest rates and the policy which you will be offered for.
4. When the car model reached its “End of Life” days- when the new model for a specific automobile is about to be introduced to the public, the car dealer will try their best to clear off their current stock on any previous models to make ways for their new launch model. If you wanted to get yourself the previous model, now is the best time to so because you will be on the high side getting a good bargain.
5. In a down market – when the car industry is not doing good, then for both new and used car, the automobile dealers will try everything that they can to attract customers in order to meet their sales target. Some of the incentives which might be offered are discounts, cash incentives, free gifts, attractive interest rates offered, a low down-payment allowed etc.
6. Combine discount – if you are getting a few auto loan packages from the same loan provider for more than one vehicle, there is a high possibility that you will be entitled for a good discount from the auto company. In many occasions, the vehicles owned by different family members who lived under the same roof will tend to get their loan through the same provider to utilize this great benefit of combine auto loan discounts.