Auto loan interest rate differs from lender to lender. You can avail of reduced auto loan interest rate if you make the necessary preparations before applying for an auto loan. One way of having a lower auto loan interest rate is to maintain a good credit record. People with good credit history are considered low credit risk and are therefore given lower auto loan interest rate. Try to increase your rating before you apply for a loan to at least 680. This will give you bargaining power and enable you to negotiate for better auto loan interest rate deals. To further lower your auto loan interest rate, pay off any current debts, make monthly payments for debts you can fully pay off or putting money into your savings account. Your savings deposit will help your credit score since this serves as your source of funds in case of emergency. Never having missed payment on your auto loan doesn’t mean that your credit score is high. Prompt payment is only one of the numerous variables that comprise the credit score. A number of credits availed of will lower your credit score because of the possibility of spending up to the credit limits. Credit account balances above 50% of the credit limit also decreases your score. You can close old credit accounts to increase your credit score. Before you approach a lender for auto loan financing make sure that you have removed previous errors off your credit report as these can contribute to a higher auto loan interest rate. Other points to keep in mind include: If you are fresh college graduate, do not apply for auto loan financing until you have worked for at least 6 months. Don’t settle for auto loan financing companies that render poor service and have a number of hidden charges. If you have moved in for the last six months, try not to apply for auto loan financing. Lenders need verifiable addresses and income. So, established these requirements before applying. Previous auto loan financing record or a home mortgage can help. Find a stable job such as finance, engineer, etc. Self-employment rarely gets approved. Negotiate with creditors on late payments, charge off’s and other negative marks on your credit report before applying for auto loan financing. If you do any of these steps, it could spell the difference of a few hundred dollars to even thousands of dollars off your auto loan interest rate. Another way to reduce auto loan interest rate is to pay a bigger down payment. You can also opt for a shorter term for your debt. Short term debts usually have lesser interest rates. But if you choose a longer term, the interest rate may be bigger but the monthly payment is lesser. Another way to auto loan interest rate is to refinance. Refinancing companies that offer lesser APR (annual percentage rate) will pay your current balance. In turn, you are expected to make monthly payments to the refinancing company to lessen your auto loan interest rate.
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