How to Find the Best Car Loan Rates
Finding the best auto loan rates hasn’t been easier than it is today, especially if you have excellent credit. An October, 2012 report by Automotive News said that banks “are charging U.S. buyers the lowest interest rates on new-car loans since the Federal Reserve began surveying them in 1971.” Additionally, Comerica Bank’s Q2 2012 Auto Affordability Index shows that new vehicles are more affordable for the average American household than they’ve been since the early 1980s.
These trends, my friends, indicate a buyer’s market. Quite literally, there hasn’t been a better time to buy a new car, truck, or SUV since I was in junior high school.
As favorable as market conditions might be, getting the best car loan rates still requires some effort on the buyer’s part, unless, of course, you’re taking advantage of a 0% financing opportunity. Rates don’t get any lower than that.
If your credit isn’t perfect, or the vehicle you want to buy isn’t available with zero-interest financing, you’ll need to shop around for the best auto loan rates. On the pages that follow, we’ll provide useful tips on finding the best auto loan rates.
Know Your Credit Score
Tip #1: Know Your Credit Score
Before you shop for the best auto loan rates, it’s helpful to know exactly what’s on your credit report, and what your credit score is. There are three primary credit-reporting agencies in U.S. – Experian, Equifax, and Trans Union – and they are required by law to provide consumers with one free credit report each year.
To obtain your free credit reports, it isn’t necessary to contact each credit-reporting agency individually. Simply visit AnnualCreditReport.com and you can make a single request for all three reports.
When your credit reports arrive in the mail, be sure to review them closely. If you find errors, be sure to file an individual dispute for every error discovered, and do this as soon as is possible. According to federal law, the credit reporting agencies have 30 days to verify whether the information on your report is accurate, or they must remove it from your record.
Now that you know what your credit report contains, and what your credit score is, you’re ready to try our tips for finding the best auto loan rates.
Shopping Lenders for the Best Auto Loan Rates
Tip #2: Shop a Network of Lenders
Rather than approach financial institutions individually to discern the best car loan rates, try shopping for the best auto loan rates through a network of lenders, such as Lending Tree. With a company like Lending Tree, consumers can submit a request for a car loan and obtain the best car loan rates from several financial institutions.
Approaching the task in this fashion saves time, and can quickly help a consumer find a competitive rate that serves as a benchmark for further competitive shopping.
Tip #3: Shop Your Current Bank or Credit Union
Once you know what the best auto loan rates are through a lending network, its worthwhile to visit the local branch of your existing bank or credit union to see if they can offer you a better rate. Be sure to take the best existing offer you have along for the visit, and ask your financial institution if they can beat your best deal.
Oftentimes, because they’re more familiar with your finances and bill-paying history, your existing bank can work with you to provide the best auto loan rates.
Shopping Dealers for the Best Auto Loan Rates
Tip #4: Shop the Dealer
Car dealers have access to a wide variety of finance options, and can often provide you with the best auto loan rates. However, your chances of getting a great interest rate are improved if you walk through the door pre-approved with a loan because the dealer and its network of financial institutions will know that you’re credit-worthy, and they’ll know what rate they need to beat to win your business.
Obviously, the best car loan rates are the no-interest or low-interest loans typically subsidized by the auto manufacturers. These, however, are offered only to buyers with excellent credit scores. Nevertheless, dealerships can help credit-challenged customers find the right loan at the right price.
And if they can’t, don’t worry about it. If you’ve followed our tips on finding the best auto loan rates, you’ve arrived at the dealership with a pre-approved loan that already meets your requirements.