Everyone wants to get the best interest rates for themselves. It means lower monthly repayments, you'll pay less over the life of your car loan, and you'll have extra money to put towards other expenses.
But why do some people obtain better car finance interest rates than others? Here are some tips to help you negotiate the best car loan rate for yourself.
Shop Around Without Enquiring
Don't let the salesperson or dealership financer tell you that the offer they have provided is the best in the market for your circumstances. Each lender assesses their interest rates differently, where some lenders will base their interest rates on the applicant primarily, other lenders will base their interest rates more on the car you plan on purchasing.
So, depending on the vehicle you are looking to buy and the overall strengths in your application, there may be a better deal out there for you, if you shop around.
Get Assistance With Your Car Loan Shopping
There are many great and reputable car loan brokers (including CarLoans.com.au) that have a range of lenders they have access to. Car finance brokers have a few advantages that mean we can usually do in a few hours what may take a borrower weeks in their own time.
Because of the number of loans we help apply for, we may even get you lower car loan interest rates than what you can obtain yourself. Our brokers know the various requirements and approval criteria for many lenders, which means we can help you apply for the lowest rate car loan with the best chance of getting approved.
A car finance broker can also take the guesswork out of comparing car rates too. By understanding all their lender's different policies and guidelines to give you the best chance of getting it right the first time and creating only one enquiry for your car loan proposal.
Do Not Apply Unless You Are Committed
Building up your credit history is a great way to show you can manage repaying a car loan and it may even result in being offered a lower rate. However, you won't do your credit report much good if you apply for every offer out there.
Each time you apply to a lender, they are required to view your credit file, and in order to do so will create an enquiry on your credit file. The more enquiries in a short period of time, the lower your chances are of getting the best deal, and even quite a few lenders may decline the loan due to excessive loan enquiries.
Get it right the first time and don't apply unless you are 100% committed and satisfied with that quote.
Another option is to get the help of a broker. Most car finance brokers are able to perform what's known as a "soft" credit check to determine what your odds of getting credit approval are without making multiple "hard" enquiries as described above.
Ask For a Better Car Loan Interest Rate
The old saying goes “if you don't ask, you don't get”, well this can apply to car finance too. Some car loan providers may not offer you the absolute best deal they can achieve upfront, so always ask if the rate can be lowered and if it's the best rate they can offer you.
In many cases, they would rather lose a little profit from your deal than lose you as a customer overall. It's not like they are going to show you the door just because you're negotiating your interest rate.
Commit Some Savings To Your Car Purchase
Having a strong deposit for your car loan can help both your chances of approval and the interest rate you end up getting offered too.
The lower the borrow amount against the vehicle you're purchasing, the lower the risk to the lender. This not only opens up some options in terms of which car loan providers will approve your loan, but with some lenders, you may get a discounted car loan interest rate, as you are committing some cash deposit towards the car and not borrowing the whole amount.
Demonstrate a strong positive payment history
Your credit history is an important factor when applying for any type of finance. If you've had a previous car loan, showing that you've been able to consistently make your repayments can help demonstrate you are a responsible borrower.
If you have existing finance, avoid things like missing payments as much as possible, not only does this come with certain penalties, but it will also likely impact your credit scores and will affect your negotiating power.
Need help negotiating a lower interest rate?
At CarLoans.com.au our brokers help borrowers find the lowest possible rates for their next car loan on a daily basis. With access to a wide range of lenders and a streamlined process that makes applying simple and easy, we can help you find some of the best rates in the market. Get in touch with us today.