If you're like most Americans, you probably buy a new car about every five years. Most people need an auto loan to buy a new car, truck, SUV, or van. Since the interest on auto loans can add up over time, especially on a five- or seven-year loan, it's important to try to get the lowest rate possible on your car loan. So, find a car loan with a low rate by...
Get a loan before you go shopping!
If you don't think about financing until you get to the car lot, the dealer will try to sell you "dealer financing." That's because his loans usually have extra "padding" that makes you pay more and helps him make more money. Most of the time, the interest rate from a dealer is 3% higher than the interest rate from a bank, credit union, or online loan company. So get a loan before going car shopping. Another benefit is that you'll be able to get a better price on the car because the dealer will know you're a stable customer.
Knowing what the rates are!
You won't know if you're getting a good deal on a car loan unless you know what the going rate is. Find out what the current interest rates are for car loans by looking online, calling around to local banks, or asking friends or family. Be sure to compare like with like by looking at things like loan term, since rates are usually lower for loans with longer terms. Your rate will also depend on how good or bad your credit history is.
Do your research!
Get as many quotes as you can from lenders. Check with your current bank, credit union, online lending services, and other loan companies. Get quotes for at least 3 or 4 loans so you can compare rates, terms, and fees. Tell them you're looking around for better deals and that you've found some. To get your business, they might lower your rate or drop your fees.
You might also want to think about an online lending service that lets you compare rates from multiple banks and loan companies at once. This is a convenient way to shop around without getting multiple hits on your credit report.
