Tips for Saving on Car Loans

Posted by at 25 June 2019, at 15 : 56 PM

Tips for Saving on Car Loans

There are many ways you can save on car loans. We’ll present several options so that at least one solution is available to everyone reading this article. And we won’t give you bad advice that sounds good on the surface like extending the loan by a few years, bringing down the monthly payment while dramatically increasing what you pay over the life of the loan.

Catch Up on Your Payments

There are several ways catching up on your payments will allow you to save money on a car loan. First, making up late payments and then making all future payments on time is one of the simplest ways to clean up your credit. It eliminates outstanding bills, and a dramatic improvement in payment history makes you more attractive to creditors. A side benefit of this approach is that it raises your credit score with every month you pay all your bills on time and in full. There are no gimmicks like disputing legitimate entries on the credit report or trying to settle debts.

Pile Up Cash

Piling up cash can help you get a better deal on your next car loan for several reasons. First, when you put a larger amount of money down on the vehicle, the lender’s risk in case of repossession is lower. This is why putting 10 or 20 percent down on a car results in a much lower interest rate than 3 percent down. Secondly, when you have significant savings set aside, you can pay for last minute additional costs like an extended warranty or taxes you didn’t take into account. You don’t have to roll these costs into the loan, adding to the principle balance on which you’ll be paying interest for several years. Third, when you have a decent savings account, you’re guaranteed to be able to pay the next car payments on time and in full. On the other hand, if you’re late with one of your first car payments, depending on the contract, the interest rate may spike or they start hitting you with extra fees.

Choose a Car Lender who Works with Your Type of Credit

If you have poor credit, conventional lenders will charge you high interest rates if they do business with you at all. Others will insist on cosigners or a disproportionately large down payment on the vehicle in order to give you an interest rate that isn’t two or three times what they give to those with good credit. The alternative is to work with this Hamilton website for car loans for those with less than perfect credit. You can compare the interest rates and loan terms they offer relative to the competition and see what a difference the right type of lender makes.

Be Wise with Your Old Vehicle

A common tactic to try to save money on your car loan is to trade in your old vehicle. This choice is certainly convenient, but you may get more for your car if you sell it privately and then roll the money you receive into the new vehicle. Explore your options for settling any outstanding debt before you roll the old car loan balance into the new car loan.

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