A low APR car loan will reduce the amount of interest you have paid on the loan over a specific time span. However, there are few dealers who will attempt to confuse and force you to pay higher rate of interests. So before visiting the dealer, you have to do your homework properly.
How to Get a Low APR on a Car Loan
Now which steps fall under the homework?
First of all, you have to get your credit report. If you have good credit report, you will receive low APR from your dealers. You are entitled for generating one free credit report from your credit bureau. You can visit the site annual credit report to generate free credit reports.
In the second step, you have to check the average interest rate of your residential area. You can check the bank websites for identifying the interest rates offered by them.
In the third step, you should show a proof of your income. Your pay slip, tax return documents, permanent account number, employment paper, etc. are shown to the bank to get a lower interest rate.
In the fourth step, you should find out your dream car. Note that you must not show the dreams to the dealer. Otherwise, they will misguide you and enforce you to pay more interest rates for better cars. You should consider own capacity and find a suitable car for you.
In the fifth step, try to identify the interest rates offered by dealers and the bankers. Next is to compare the interest rates offered by dealers and the bankers. The majority of the bank loans offers comparatively lower APR. You have to compare at least three banks’ APR and finalize the lowest APR lender and apply for the car loan.
Want to know how to negotiate the best APR?
The first step is to get a pre approval either from a bank or from the financial institution. A pre approved loan offering can help you to get a low APR car loan from the bank. Secondly, if possible, try to take a short term loan from your bank or dealers. A standard short term APR can make the repayment schedule for 36 months. However, you should also note that a short term APR can generate greater EMI. So, you have to evaluate whether you can afford higher EMI or not. Another important thing you must consider is the large down payment.
The majority of the car dealers prefers to get higher cash values. If you make greater down payment, the overall loan amount will be decreased and you will be able to take a short term car loan. Sometimes, the dealer pays attractive offers for your purchased car. However, you can swap this additional facility with a lower APR car loan. This can help you save more money while repaying the loan EMIs. So, why to wait? Just get ready and walk away from getting a bad deal from your dealer. Do proper homework and get the right deal from the dealer and the banker as well.