Don't Like The Interest Rate On A Traditional Auto Loan? A Few Alternatives To Help Get You The Car You Want

14 April 2015
 Categories: , Blog

One of the things you need to consider when buying a vehicle is the interest rate on the loan. A higher rate will mean you have to buy a less expensive car to stay within your budget. When you go to the dealership, and allow them to work on financing for you, the rate is going to be much higher than if you were to go elsewhere for the loan. You will be able to afford more car if you work out the financing beforehand with lending that does not have to know you are buying a car. Consider these options before resorting to a traditional car loan.

Credit Union or Bank

If you are in good standing with your credit union or bank, you can apply for a personal loan. If the price of the car is more than you can get personally, ask about a low interest car loan. These institutions often offer lower interest rates than the typical car loan company does since you already have a relationship with them.

Loan Companies

There are many lending institutions like Auto Max available for all types of loans and credit. Someone with bad credit trying for a personal loan will have to pay a higher interest rate, but if you have average to decent credit, that rate will be lower. If you tell them it is for a car, which means the debt is secured, the rate can go even lower. Of course, this means that if you miss a payment, the company can repossess the vehicle.

Friends or Family

You might not be willing to ask your friends or family for a loan of this amount. However, if you know they have the cash available, and you draw up a binding contract, they may just surprise you. In most cases, this is the best solution to paying high interest. You can sit down and discuss all the different terms of the loan, to include how long you have to pay it back. Offer them periodic lump sums, such as part of your tax return, in addition to regular payments.

Keep in mind that anytime you take a loan out for a car, you are going to have to keep it fully insured against damage to it. If you can get a personal loan instead, you can forego it, but it is a good idea to have some type of damage insurance. The most important thing in any loan situation is to know how much you can comfortably afford to pay monthly. Consider the principle amount, interest, and insurance costs. Then find a loan that will work for you.