Get a Great APR on Your Next Car!
When you’re shopping for a new or used car, the biggest considerations are usually; can I afford this vehicle and how am I going to pay for this vehicle? If car financing is the rate you’re looking to take, you’re going to want to know what interest rates you qualify for. Your annual percentage rate (APR) can vary, but it’s mostly based on your credit score. With that being said, before you decide to apply for a car loan, it’s important to check your credit score. In Canada, you can get your credit score for free through Borrowell! In this article, we’ll talk about the factors that affect your APR and three ways to get a great APR on a car!
What Factors Influence APR on a Car Loan?
Your Credit Score. Your credit score plays a huge role in what interest rate you’ll be charged on a car loan. The better your credit score, the less interest you’ll pay.
The Length of the Loan Term. The length of your loan term also plays a part in determining your APR. The longer the loan term, the higher the interest rate.
If You’re Buying a New or Used Car. Because of the many manufacturer incentives on new cars plus the higher resale value, new cars typically have lower interest rates than used cars.
The Model of Car You’re Buying. Certain car makes and models have better resale value than others and this will affect the APR.
Your Down Payment. The amount you’re able to put as a down payment will also affect your interest rate. The more you put down, the lower your interest rate will be.
How to Get a Great APR on a Car Loan
1. Work to Improve Your Credit Score.
As we mentioned earlier, your credit score plays the biggest role in determining what interest rate you qualify for. Therefore, if you can, you should wait to apply for a car loan until you have a good credit score. If you don’t have a good credit score, there’s no need to panic as a car loan is a great way to improve your credit, but be prepared to pay more in interest. Ideally, you apply for a car loan with a great credit score and you’ll find yourself getting approved for a loan with a low-interest rate.
2. Make Consistent Payments on Time and In Full
Lenders want to see that you’re a reliable borrower, one of the best ways to prove this is to consistently make your payments on time and in full. If they can see that you’re able to responsibly manage your bills, they’ll see you as a low-risk borrower. If you continually make your car loan payments on time, you may be able to refinance your loan for even better terms!
3. Calling Lender’s and Dealership’s
Calling both lenders and dealerships is a great way to potentially get the inside scoop on tips and promotions. Lenders may be able to give you valuable information regarding things you can do to further lower your APR.
If you’re interested to see the current lender rates in Canada, check out our rates page!