Auto Loans: The best tips for getting low rates
Looking to replace your current automobile should first have you thinking about how you will pay for it. The marketplace is full of merchants who can loan you the money. Finding the one with the lowest interest rate, however, is the crucial key.
Comparison shopping between the different banking institutions will get you the best deal. Once you know which institution you are comfortable working with, you can compare the interest rates they can offer.
Banks and credit unions have the best advantages. They can secure financing before you even begin to shop the car showrooms. You could also have the option of financing your vehicle through your home mortgage company. With a home equity loan you’ll most likely get a great interest rate. This will also allow you to deduct from your taxes.
Your dealership can also offer a car loan. Something to watch out for through this is that some dealerships offer low windshield prices in hopes to regain the difference when they finance it. Another advantage to finance through the dealership is that some auto manufactures offer no interest or low interest loans. These definitely would be the best loan to secure. They would be offered to buyers with excellent credit scores. Depending on the dealership you go through, they may be able to help credit challenged buyers find the right loan. Checking your credit score before you begin shopping would be an excellent idea.
The key consideration to look at when requesting a loan is the APR (annul percentage rate). This rate changes on a day to day basis and will ultimately determine how much you actually pay for your new vehicle.
Another important consideration is the term of the loan. Keeping your loan in a shorter term, such as a 3 year versus a 5 year, will greatly effect the over-all amount your pay for your vehicle. This also affects your monthly payment amount, so keep the terms as short as you can afford. The optimal amount of time for an auto load is 48 months.
Instead of going to lending institutions individually to check rates, consider checking first with a network of lenders such as Lending Tree. This type of company can give you an idea of the best car loans available. This will not only save you some time, but will also give you a better idea of what to ask for with the company you choose. With this information you could then approach your local bank to see if they can match the rates.