Four Tips for Vehicle Purchase Loans

1. Credit Score

Your credit score will directly affect your interest rate. The higher your credit rating the lower the interest rate and likewise the lower your credit score the higher the interest rate. To a lender the lower the credit rating the greater the risk that the purchaser will default on the loan. The difference can vary quite a bit, as much as 10 to 15 percentage points. If your credit score is low and you don't need to purchase a vehicle right away, take some time and improve your credit scores. In the long run you will have saved yourself thousands of dollars. There are many helpful sites on the internet that can help you to improve your credit scores.

2. Shorter Terms Lower Interest Rates

Lenders view longer term loans as a higher risk than shorter term loans, banks offer a lower interest rate for purchasers who will to agree to a shorter loan period. If you are looking for the lowest auto loan rate possible choose a loan that has the shortest repayment time period.

3. Dealerships Sometime Profit on Interest Rates

In addition to dealerships earning a profit when sell a vehicle they can also be earning money when a buyer finances a vehicle from one of their "preferred lenders". In these cases the lenders may allow the dealership to charge the buyer a higher interest rate which can be as much as 2 to 3 percentage points and the dealer keeps the difference. So in addition to shopping around for the perfect vehicle remember you can shop around for the perfect loan for your budget.

4. Negotiate for Rates

You can negotiate for a lower interest rate, if you have good or excellent credit you have more room for negotiation. If you feel the interest rate being offered to you is too high most likely it is. If negotiations don't work out take your car loan to a major bank. If you are a member of a credit union even better, generally credit unions offer their members better rates.