If you want to get a car on finance, you need to find a way to get the interest rate as low as possible. Doing so means you pay less a month, as well as over the duration of your loan. This is true for all types of loans, not just new car loans by the way.
Unfortunately, many of us have poor credit and we have been led to believe that we should consider ourselves lucky to get finance at all, so we shouldn’t complain about any high interest rates.
In reality, however, there are plenty of things you can do to stop lenders from effectively holding you ransom.
- Clean Your Credit Rating
If your credit rating is poor, there will be several marks against you on your credit report. But are all of those fair? Get a copy of your report and sift through it. You can also appeal against each of the bad marks against you. While it is unlikely that creditors will willingly remove a mark if it is valid, they may fail to respond on time, making the marking invalid.
- Increase Your Credit Rating
Paying off some credit on your file is a great way to improve your rating. You also need to make sure that you pay all your regular bills on time. The more disposable income you have, the better your credit rating will be. Hence, if you can pay anything off, your rating will also look better.
- Compare the Market
There are quite literally thousands of lenders out there, specializing from people with the squeakiest clean credit to those who have been declared bankrupt several times. You need to make sure you find a few who specialize in people just like you. But don’t apply for the first one you come across. Rather, you need to compare their rates, terms and conditions, fees, and more. You need to find the one that will give you the best deal overall. The thing to look at is how much you will actually pay overall, even though it may be tempting to look at how much you will pay each month. Your goal should be to pay as little overall as possible.
Perhaps you already have a car loan, in which case you may be able to refinance it. You can either speak to your existing lender and see whether they can drop your payments or interest rates because you have been with them for a significant period of time.
Alternatively, you can go to a different lender who can give you a better deal. This won’t get you that new car you so desperately need, but it does mean that, the next time you apply for a loan, you will get a much better deal because your credit rating will have improved as well. That is, of course, if you did actually make all your payments on time and in full.