How to get Low Interest Rates on a Car Loan?
March 18 2020,
When buying a new or used car, one of the main stress points is figuring out how to pay for it. It is difficult to predict the fluctuations in auto financing in Toronto or across the country; however, there are some simple steps that you can take to get a low-interest rate on your next automobile loan.
Keep an Eye Out for Manufacturer’s Deals and Offers
The first way to get a low-interest rate is an easy one--watch for manufacturer sales events. When dealerships or vehicle manufacturers want to clear away old inventory in favor of new model year vehicles, they start to offer great deals. These deals could include a specific dollar amount off a new vehicle or low-interest financing for a specific time period. Many manufacturers will advertise 0%, 1.9%, or 2.9% financing for 48, 60, or 72 months. While these rates are most often given to new vehicles, some manufacturers also do the same for their certified used cars as well. Simply visit the manufacturer's website or your local dealership's website to determine the latest financing offers. Keep in mind that these financing offers often have strict credit requirements, so you may not qualify for the lowest rate if your credit isn't excellent.
Plan Ahead; Watch Your Credit Score
The second way to get low-interest rates on car loans is to boost your credit score. You can review your credit history by running your credit report from the three major credit reporting agencies--and you can do this for free once a year. 800-850 is rated as an exceptional credit score; 740-799 is a very good credit score; and 670-739 is a good credit score. Scores above 740 will most often qualify for the best interest rates while scores below 670 are considered "fair" or "poor" and usually are several percentage points higher. There are no specific rules to building your credit or increasing your score, but there are several useful tips to implement: only apply for the credit you need (you don't need a credit card for every store you visit); pay your bills on time, every time; and don't carry a balance on your cards--if you do, don't get close to your card's limit.
Shop Around Online, See What Others are Offering
A third way to get the best auto financing in Toronto is to be prepared before you enter a dealership. You should shop around for auto financing online before you head out to shop for a car. Banks and credit unions often have great interest rates, keeping your total interest paid low. However, if you go to a dealership without your financing in order, you might be tempted to just finance with whatever rate the dealership offers--and that rate could be several percentage points higher than necessary.
While there are many other ways to keep your interest rate low on an auto loan--such as getting a shorter loan term--the most important thing is to do your research before buying a vehicle. You should know your credit score, know what sales events are going on, know what interest rate your bank provides for financing, etc. Being prepared could save you hundreds or thousands of dollars in interest over the course of your auto loan.
