According to Kelley Blue Book, that was the average cost for brand new automobile in 2018.
If you are already getting dizzy from the large figure than know that you are not alone. Cars are only getting more expensive which means that people have no choice but to take out an auto loan, even on used vehicles.
Getting a car loan has its benefits, namely that you need little money upfront in order to leave the lot in a new ride. The alternative consequence is that you end up paying far more than the retail value thanks to interest.
As a result, negotiating the lowest APR (annual percentage rate) on a car loan is the best method for getting a good deal on a new car.
Build Good Credit
The number one factor lenders will consider when offering a low APR on a car loan is your credit score. If you currently have a low credit score there is little you can do then let time take its course as low credit rates improve slowly over time. However, if you are new to the game building credit seems rather easy and straightforward: always pay your bills on time, avoid getting too close to the credit limit, and only apply for the credit you need.
Do not know your current credit score? The three major credit reporting agencies (Equifax, Experian and TransUnion) allow consumers to check their credit once a year for free.
Consider a Cosigner or Co-Borrower
If this is your first rodeo and you haven’t had time to build up a solid credit history, considering a cosigner or co-borrower on an auto loan is a good alternative. This option is also appropriate for borrowers with a poor credit score. The cosigner essentially confirms that they are also responsible for negative impacts if loan payments are missed or not paid in full, yet has no rights to the vehicle. An example of a cosigner would be a parents signing off on their son or daughter’s first car.
Meanwhile, a co-borrower has equal rights as the other borrowers on the loan meaning that they have a 50/50 share on the vehicle as well as obligations to the loan. Co-borrowers spread risk in the eyes of lender meaning they are not only more lenient on approving the loan, but also more inclined to offer a lower APR.
Request Shorter Loan Terms
This method to a lower APR is only feasible if you are financially sound as reducing the duration of a loan significantly lowers the APR yet requires a far higher monthly installment on car payments.
The biggest risk you can take is falsely believe that the lender makes all the terms. In fact, lenders are often willing to negotiate the APR and interest rate on a car loan. Remember, lenders are a business like any other company. If they are lacking business, they will bend the rules to get you to sign off. So don’t be afraid to ask!
Refinance Your Auto Loan ASAP
There is no time limit to auto loan refinancing which means you can apply for another loan as soon as your credit score improves. Refinancing is an option for consumers that already purchased a car when their credit score was low and thus received a high APR with the initial loan. Lowering your APR on a car loan is very possible when you refinance as even a one-point percentage reduction can save you lots of money!