How to Get a Car Loan at a Low Rate of Interest
Buying things on credit has become a norm nowadays. The total
amount of outstanding debt in the UK has reached ₤1,148.
83% of this is in the form of mortgages and 4.9% is in the form
of credit card debt. More and more people are taking out loans.
A loan can solve a number of purposes. It can help you buy a
house, carry out home improvement, finance your child's
education, pay for a holiday trip, etc.
You can also use a loan to buy a car. Getting a car loan is
not a problem. The problem is its interest payment. If the rate
of interest is too high, it becomes difficult to keep up with
loan repayments. If you default or miss out at repayments, your
credit score gets adversely affected. In case of a default, the
lender may even repossess your car. To avoid such a situation,
you should look out for a low rate car loan.
If you have a good credit history, you should bargain over the
interest rate and try to take the maximum advantage of this
situation. If you have unpaid credit card bills or unpaid loan
balance, the lender may charge a high rate of interest from you.
Therefore, before applying for a car loan, you must pay
up all your unpaid bills and loans. This will help you obtain a
loan at a low rate of interest.
A down payment can help you pay less interest on a car
loan. If you pay a down payment, your debt obligation will
be small and consequently, your interest obligation will also be
small. Another way to reduce your interest burden is to give
your old car in exchange of the new one.
If you are a homeowner, you can easily obtain a low rate car
loan. You can offer your house as collateral. This increases
the lender's confidence in your repayment ability and he will
charge a low rate of interest. In case of a default, the lender
may repossess your house and recover his money.