How to Save Money on Auto Rates
There are many ways you can lower your auto rates to save money. Here are some tips on what you should do to minimize your costs. We have the answers to your questions.
Consider Using Home Equity
If you’re willing to place your home as collateral, utilizing your home equity could bring you lower auto rates. Because home equity loans are secured against the value of your home, they usually offer more competitive rates than traditional car loans. Furthermore, the interest on a home equity loan is usually tax-deductible, which can save you even more money. This type of financing can be extremely risky, though, because you might lose your home if you fall behind on your payments. Therefore, you must know you have the discipline to make every payment on-time.
Set Up Third-Party Financing
Third-party or independent financing is what we offer on our site. Obtaining financing through an independent lender instead of the dealership can give you massive savings. Almost always, independent financing can offer lower auto rates than the dealership, depending on your credit. Occasionally, dealerships even make more profit from financing than they do from the sale of the car! Dealerships will try to trick you into focusing on a monthly payment number rather than the total cost of the loan. This can end up costing you dearly because the dealership then increases the interest rate or term of the loan to meet that number. Walking into your car deal with independent financing will give you the upper hand for negotiation purposes.
Avoid Zero-Interest Loans
Zero-interest loans are usually not as attractive as they seem. Typically, when dealers offer 0% financing, it’s in the place of a substantial cash rebate. Cash rebates can lower the amount you have to borrow to finance the car, which means you will save considerably on payments and interest. In most cases, taking the cash rebate over the financing deal makes more sense.
Know Your Credit Score
Checking your credit score is a good idea before you apply for any type of loan. Knowing your credit score can help you in several ways. First, it will give you the chance to review your credit report for any inaccuracies that might be hurting your score. Secondly, an awareness of your credit score will make you a more knowledgeable negotiator, as you will have more realistic expectations of the auto rates and terms for which you qualify. Finally, finding out your credit score will also give you the chance to take steps to improve it, if need be. For example, if you have unpaid bills, you can take care of this before applying for your car loan.