Well, that depends on who’s asking! If you’ve got a good credit score (at least 650), you may qualify for a rate between 1% and 7% for a new car, depending on the make. For a pre-loved model from Laneway Auto Loans used car lot, you could be looking at 6% to 8%. But if your credit score isn’t so good, your interest rate could soar to over 45%. Averaged out across the market nationwide, interest rates on car loans in Canada generally hover around 7%.
Where Do I Find the Lowest Interest Rate in my Area?
Your next step is to check out auto financing interest rates in New Brunswick. The easiest source of financing is the dealership where you buy your car, cutting back on the time and paperwork needed to close the deal. This is also where you can bargain for extra perks (like undersealing, a set of snow tyres, or even lower transaction fees) that can total many hundreds of dollars. Don’t feel shy about asking: reputable dealerships are eager to build up long-term relationships with their customers. Credit union members and bank account holders may be offered lower interest rates, as these institutions are familiar with your financial background and can thus measure their risk more accurately. However, this should be weighed against the benefits of handling the entire purchase through a dealership. For some buyers (particularly those with lower credit scores or patchy financial histories), online financing agencies may offer a perfect solution, although at a higher cost. The good news is that paying off your car loan promptly will boost your credit score every month.
How Can I Lower My Car Loan Interest Rate?
Paying less interest is always a smart idea. The auto financing experts at Laneway Auto Loans and Sales have some practical suggestions on how to do this:
- Improve your credit score by paying off all your loans (mortgage, credit cards, etc) promptly every month, using less of your available credit (preferably under 30%), avoiding hard queries that can lower your score for years to come, and reviewing your credit report for errors (free once a year through Equifax),
- Offer a larger downpayment by saving up for a few months before you close the deal. The more you put down, the less you borrow, and the less interest you pay, with a good chance of getting a lower interest rate too. Shaving off even a few fractions of a point can save you thousands of dollars over the term of your loan;
- Lessen your risk to lenders by lowering the amount of your loan, through a larger downpayment and/or by choosing an older, less expensive model, and finding a co-signer who can offer acceptable collateral, beyond the car itself, especially for longer loans with higher risks of turning upside down, when the vehicle is worth less than the amount owed;
- Refinance your car with a shorter-term loan, paying less interest in total, and potentially scoring a lower interest rate too, while freeing up cash for other purposes that will hopefully bring you income (even if just stashed in your emergency savings account);
How Do I Get the Best Auto Loan Deal in New Brunswick?
The first rule is to take your time: don’t let salespeople pressure you into making a hasty decision. Step back, and check with trustworthy sources like the Kelley Blue Book to find everything you need to know about your trade-in and find your next purchase.
Remember: You only sign once, which is why you need to think twice and do your research, before putting pen to paper! Looking for an auto loan?