Ways to get the best car loan rates in Ireland
An auto loan is an expensive loan followed by a mortgage, so there is always a scenario to look out for a deal with the most affordable interest rates. Negotiation is the key, but you win half the battle. There are a lot of things that you have to do to get an auto loan at a lower interest rate.
Financial experts always suggest that you carefully shop around the deals before you qualify for an auto loan. Getting a pre-qualified deal can help you land the best car deal to save money on interest. Many people would suggest buying a used car or a less expensive car, but you do not have to kill your dream of buying your dream car.
You just need to be a bit strategic while shopping for your car loan. Pay attention to interest rates, APRs, repayment terms, and associated fees. Here are the tips to get the best cat loan rates in Ireland:
- Do up your credit score
First and foremost, you should check your credit score because a lender will check it to find out your past payment behaviour. The repayment length of these loans can be up to three years or maybe more, depending on the size of your loan and your current financial situation.
A good credit score is mandatory to secure an auto loan without a hitch. Your credit score plays is the first element considered in determining your interest rates. Do not assume that you cannot get the nod if you have got an abysmal credit rating, but high interest rates will be charged.
The average interest rates for a car loan can vary between 6.5% and 22.5%. However, if you are taking out a loan for a used car, the interest rates will vary between 10.9% and 30.15%. You can check your credit score online. However, your bank and credit card issuing company can also update you. Having checked your credit score before applying for a loan is helpful because if your credit score is abysmal, you should spend some time improving it.
It is not an overnight process, so you will have to put off your plans of buying a car. You can do up your credit score through a number of ways including showing less reliance on debt. When it has been a long time since you took out a loan, the implications of your previous payment defaults will not be severe. If it is not possible to touch a good credit score range, that is fine, but make sure it fits in a fair credit score range.
- Shop based on total loan amount, not based on monthly payments
It is crucial to do proper research before taking out a car loan. Each lender charges different interest rates as they have their own methods and perceptions to gauge the risk involved in loaning you. It makes sense to get a pre-qualified approval letter from a lender, but this is estimated without a credit check. It will be of some help to some extent.
You often make a decision based on the impact of interest rates on your monthly instalments, but that is where you slip up. The size of monthly instalments will be lower when you choose a repayment period, and this can be used as bait for lenders to switch you to a longer repayment plan.
If you do so, you will end up paying more than you would if you opted for a shorter repayment plan, and that is because of accrued interest. Of course, you will have to choose a longer repayment period if you cannot afford to pay a bigger monthly instalment, but if you can, do not stretch the payments.
- Limit applications
Of course, it is very rare that you put in an application to a lender and get signed off on. Despite a decent credit score, your lender may find you a borrower with a high default risk and turn you down. In order to avoid this situation, you will likely be tempted to apply to as many lenders as possible within a very short period of time.
Never do this if you want to protect your credit score. This will pull down your credit points, and you will never be able to get the best car loan rates in Ireland. At a time, you should apply for a loan from only one lender, and if they refuse, make sure you do not turn to another lender immediately.
There must be at least a period of two weeks between two applications. In order to tackle this situation, you should use pre-qualified approval letters. This will keep you from losing your credit points. However, bear in mind there is no guarantee that this problem will be completely eradicated as the actual car loan rates are determined after perusal of your credit history. If your lender finds that it is not so impressive, they will likely refuse you.
- Read the fine print
A lender is not bound to tell you everything about interest rates, APRs and fees. Your application is accepted, and then you will be sent a loan agreement that contains all details. Once you accept it, you cannot back away. The agreement could be long and tiring enough to read, but make sure to read the fine print.
This discloses everything about interest rates, APRs, processing fees, early repayment fees and upfront fees. You can easily understand them. However, if you still have some doubts, ask your lender before signing the agreement.
The bottom line
Finding the best car loan rates in Ireland can be backbreaking, but by being mindful, you can save a lot of money in interest. Shop around and compare the deal based on the total loan amount, improve your credit score, limit applications, and read the fine print. Give priority to your credit score and repaying capacity because these two factors play a significant role in deciding car loan rates in Ireland.