The constant challenge for the most advantageous car lending rates is currently crucial as the economy goes into the tube. People in many states, particularly Florida, Nevada, California, Arizona, Georgia, Michigan, and Ohio, face enormous foreclosures and job losses. How can you possibly find the lowest auto loan rate if you live in one of these states and also have foreclosure?
Spending months trying to find as many lenders as possible and get quotes from each of them doesn’t seem realistic if you’re desperately trying to buy or refinance your vehicle. As much as the best car loan rates depend on the lender, there are certain other factors discussed in the following paragraphs.
The overarching question is how you can help yourself get the best car loan installment. The first thing you need to do is get your latest credit report and credit score from one of the three major credit bureaus. Your credit score is one of the main determinants of the interest rate the lender charges you for a car loan. If your score is 600 or lower, you’ll pay a higher interest rate than someone whose score is 725. If you’ve recently defaulted on loans or credit cards, you’ll find that your friendly neighborhood banker isn’t quite as friendly when you apply for a car loan. If you have multiple credit cards with small balances, you can try to pay them off as soon as possible before applying for a car loan. Any card you cash out will help boost your credit score.
Maintaining a healthy credit score is paramount when looking for any type of loan. If your score has already expired, you can try to buy a good, solid used car compared to a brand new car. This reduces the amount you need to fund and keeps your monthly payments lower.
Another way to get the best interest rate would be to get a secured car loan. With a secured loan, you must pledge collateral in the amount of the loan amount. This security can be any asset you have, such as stocks, bonds, jewelry, antiques, your home (which I wouldn’t suggest), and any other valuable property you own, free and clear. Some lenders who specialize in bad credit car loans even allow the car you finance to be pledged as collateral for the loan. Secured loans need to be handled carefully, as you may lose your collateral if you default on the loan. Although you can get a lower interest rate with a secured loan, you also run the risk of losing the asset you pledge.
The other option for a car loan is an unsecured loan where no collateral is required from the bank. These are hard to come by if you’re sitting on a bad credit report. Secured loans are much less risky for lenders because they can take possession of your pledged collateral in case you default. For this reason, most lenders are willing to lend secured at a lower interest rate and to consumers with bad credit problems.
There are now many online lenders who specialize in bad credit car loans. Do your research, be prepared to fill out an application with honesty, and you may find yourself in a new or used vehicle before you ever thought it possible.
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Wendy is now a financial analyst and writer. Wendy has been writing about finance and personal finance since she was a sophomore in high school. She has also been writing for several online publications and published in The Huffington Post, and Forbes Woman.
Wendy is a credentialed financial analyst and has experience working with financial institutions and businesses. Wendy is also a certified financial planner. When Wendy's not writing, she enjoys tending to her many plants, watching TV, and spending time with her family.
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