Many people and businesses in Canada rely on loans to get cars. Since 2017, the Canadian market for loan administration and related services has been growing by more than 4% every year. In 2022, this market generated more than $1.5 billion in revenue!
At the same time, many people are interested in how they can borrow money without having to deal with high interest rates. Many people want to know how to lower the interest rate on a car loan in particular.
The good news is that there are a lot of different ways that you can try to lower the interest rate on your car loan. Depending on your situation, some of the strategies in this article may not be available to you. However, everyone can use at least one or more of these techniques to pursue a lower interest rate.
So what kind of strategies might help you enjoy a lower interest rate on your loan? Read on to learn all about the top tips for lowering the interest rate on your car loan!
Work on Your Credit Score
In the long run, almost nothing will help you get a car loan with low interest rates as much as having a good credit score. On top of that, working on your credit score is an option available to everyone!
At the same time, many people are confused about what exactly determines whether or not they have a good credit score.
As a general rule, you can think of your credit score as an attempt to measure how reliable you are when it comes to paying back loans. If you are sometimes late on your payments, that will lower your credit score because it indicates that loaning to you will involve late payments from time to time.
On the other hand, this points to how you can improve your credit score. As long as you make sure that you always pay back your loans on time, you will find that your credit score gets higher and higher.
In most cases, improving your credit score is a slow process. Even if you make all of your payments on time this month, that may not prove that you will do so in the long run. That is one reason why credit scores almost always go up at a slow rate.
However, there are cases in which you can enjoy a fast boost to your credit score. If you have old debts in collections, then they will be pulling your credit score down. If you pay those debts off, they will stop acting like anchors on your credit score and allow it to rise.
It is also worth keeping in mind that some people do not even know that they have old debts in collections. You might want to check just to be sure.
Refinance a Car Loan to Save Money
Many people find that refinancing allows them to enjoy lower interest rates. Refinancing involves taking out a new loan and using the money to pay off your old loan.
Of course, that will leave you with your new loan to pay off. However, you can often find a new loan with a lower interest rate or with lower monthly payments.
If you do refinance and get a loan with lower monthly payments, you can always keep paying back the amount you are used to anyway. That way, you will end up paying less in interest over the lifetime of your loan.
Shop Around for Low Car Loan Interest Rates
Some people and businesses end up going with the first car loan offer they encounter. However, if you want to get a car loan with low interest rates, it is worth taking the time to shop around.
In some cases, you can even use the car loan offers you have from one provider to negotiate with another provider. However, this is only possible if you shop around first.
Get a Cosigner for Your Auto Loan Contract
Some loans come with high interest rates because the lender is not positive that they will get all of their money back. However, you can take care of this problem by finding a cosigner.
Cosigners promise to pay for debts if the primary debt holder cannot do so. If you have someone who knows they can trust you to pay back your car loan, they might be willing to act as your cosigner. That will relieve your lender’s concerns and lower your interest rates.
Renegotiate Car Loans to Cut Costs
In some cases, you can go to your lender and ask to renegotiate your contract.
Some people are surprised that this ever works. However, lenders want to make sure that they get their money back in the long run. If you approach them because you are finding your current loan agreement to be burdensome, they will want to make sure that you can keep making your payments.
That can make them willing to offer you better terms that might include lower interest rates.
Know How to Lower the Interest Rate on a Car Loan
If you have ever wondered how to lower the interest rate on a car loan, we hope that this article has been helpful to you. Although lowering your car loan interest rate is not always easy, you have many different strategies you can use for doing so. In the long run, finding a lower interest rate can be an investment that is more than worth it.
Accelerate your savings by signing up with Drive Away by Marble today. Sign in to your MyMarble platform and get started to secure a better car loan interest rate!
