A low interest rate auto loan can help you establish a good payment history with a small secured loan. Even with no credit history, you can get low rates by using the following strategies.

Understanding Your Credit Profile

Even if you havent used credit in the past, you still have a credit score. Your income, assets, and lack of debt are all positive factors. With enough resources, you may find that you have a good credit score and qualify for A loan rates.

Most people with no credit will have to turn to a sub prime lender for their first loan. Fortunately, auto loans are secured by the vehicle, so rates are lower than most other forms of credit.

Picking Your Strategy

The first and best strategy to find a low rate auto loan is to compare rates from several lending companies. Too often financing offered at the dealership is overpriced. Online lenders can offer you more options and better rates.

While smart shopping can help, having a co-signer with a good credit score will also improve your rates. The financing company will base their lending decisions based on the other persons score, not yours. This also gives you a chance to improve your credit history.

The third strategy is to refinance your car loan in the future, when your credit score improves. Establishing two years of good credit can usually help you qualify for low conventional rates.

Other Qualifying Factors

A 20% down payment will get your reasonable rates, but 50% can help you even more. With equity built into the car, lenders down grade the risk of the loan.

New cars bought from dealerships are also seen as a lower risk. They are less likely to need repairs or have other problems. However, you may find a better value with a used car in the classifieds.

Other Options If You Have Time

If you have a year or more before you need to purchase a car, start building your credit by opening a credit card account and creating a good payment history. In another six months, do the same with a new account. With a reliable credit history, you will soon be able to get the best rates on auto loans.