How to secure the best interest rate on a car loan

When it comes to getting finance for a car, everyone wants to get the best interest rate they can possibly get. Car loans, unlike mortgages, aren’t loans that you expect to have for a long period of time, but getting the best interest rate can still save you money.

1. Shop Around

Don’t be sucked in by dealership sales people and clever marketing campaigns. There are so many different car loan financiers out there that it is very rarely worth going with the first deal that you’ve found. You might find that after you have spoken to several companies, the first option is the best deal, but doing the legwork to find out what offers are out there is the first step to getting the best interest rate on a car loan. When you shop around for car finance, it is very important to remember that if you submit too many applications within a short period, it can have a negative impact on your credit file and reduce your chances of obtaining a great finance rate. So while you’re looking around for that perfect vehicle and best finance deal, ask questions but try to limit the number of applications you submit.

2. Get help from a consultant

Consultants, like Kiwi Car Loans, are some of the most helpful services you can use when it comes to finding the best rate on a car loan. While you can go directly to your bank for finance, remember that we have access to products from not just banks but alternate non-bank lenders as well.

If you are shopping for a car loan for the first time, then speaking to a finance consultant is a good place to start. You simply fill in a single form and your consultant then looks through products from different finance companies, to find the best rates for you and your circumstances. This saves you time and headaches as you can clearly see a lot of offers side-by-side and compare them to see which works best for you.

3. Ask for a better rate

You may decide that you want to use a specific company or dealership to provide your car loan, whether it is because other people have recommended them or you’ve been a loyal customer of the institution for several years. Whatever the reason, that doesn’t mean you just have to settle for the first offer they make you. If you have done your research, you may be able to use that information to negotiate a better deal.

Even if you haven’t started shopping around, you can still ask “is that the best rate you can do for me and my vehicle?” Most of the time, the first quote you’ll get for a loan interest rate won’t be the best rate that the dealership can do.

4. Don’t apply useless you’re ready

Every time you apply for a loan, an enquiry is left on your credit file. These are visible to future lenders of any type of credit. The more enquiries on your file, the more difficult it can be to obtain credit in the future, some lenders may even decline an application based solely on this alone – even if you didn’t take out any of the other finance offers.

You should only ever apply for a loan when you are 100% sure that you are ready to commit to the loan you are being offered. Make sure that you have read through the terms and conditions and any fine print associated with the car loan.

You may have found one with an incredible interest rate, but remember to compare not just the interest rate, but the fees and charges as well. There may be additional costs and it may end up being far more expensive than a similar loan product with a higher interest rate but lower fees.

The worst thing that can happen is you sign on the dotted line and then realise the deal isn’t the right one for you. By then it is too late to change your mind and you’re locked in. You may be in need of a vehicle quickly, but rushing through the financing process can leave you on the wrong side of a bad deal or owing a lot of money that you can’t afford to pay.

5. Use your savings

One of the easiest ways of getting a better interest rate on a car loan is to reduce the risk to the lender. If you’re buying a car that costs $45,000 and you put $15,000 of your own savings towards the vehicle, you’re much more likely to get a better interest rate because you’re able to pay a third of the vehicle’s cost upfront.

Of course, you don’t always have to put up a third of the cost of a vehicle yourself, but the more savings you can commit towards the initial cost of the vehicle, the smaller the loan you will need to take out and therefore the less interest will be payable. Most importantly, the lender will also see that you’re committed to paying the loan off and be more inclined to consider your application at a better rate.

Kiwi Car Loans

Kiwi Car Loans can save you time and money on finance because we have access to a panel of lenders who we can compare on your behalf to ensure that you are getting the best finance option for your circumstances. Speak to us today on 0800 008 888 or get a no obligation 60 second finance quote now, and see how we can help make finance easy.

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