Unless you’re one of the rare birds who has the discipline to save up the funds to purchase your new car outright, taking on a car loan is something we all have to confront several times throughout our lives. As with financing other purchases, it’s important to spend some time exploring all your options to ensure that you get the best possible rate. After all, auto loans are some of the largest loans most consumers carry, so getting a competitive interest rate will help you save a lot of money over the financing term.
Take a look at the three tips below for getting the best interest rate on your next car loan:
Use Online Comparison Tools
Given the sheer volume of lending institutions out there today, it’s hard to figure out which will offer you the best rate; checking in with each individual bank’s website would be burdensome, but if you exclude too many from your search to save time, you might be missing out on a better deal. This is where online comparison tools come in. Some sites allow you to plug in your some information about the vehicle you’re purchasing and the finance term you’d prefer, then it spits out the average interest rates currently offered at several major banks.
These tools save you a lot of time, and give you a point of reference in terms of current interest rates if you choose to expand your search even further.
Consider Credit Unions
Since the recession, credit unions have become a very popular option among consumers looking for financing deals. This is for a good reason: credit unions often offer the most competitive interest rates out there, so be sure to check in with a few to see what they’re offering as you search for the best financing auto financing option.
Also, don’t be intimidated by “rules” associated with credit union membership – these days there are lots of loopholes for joining a credit union with a trade or organization that you might not be a part of. Ask a customer service representative at the credit union you’re interested in for details.
Don’t Dismiss The Dealer
In general, banks and credit unions offer cheaper auto financing options than car dealerships. However, if you have a low credit score, the playing field evens a bit. Dealers are often willing to work with those with less-than-stellar credit, even if most banks won’t. Also, dealers are often open to negotiating their rates down significantly, which is often not an option with most commercial banks. It’s a good idea to go into the dealership with some rate quotes from other lending institutions, then see if the dealer will match or beat those rates. You’d be surprised what some shrewd haggling on your part can accomplish!
Buying a car with a loan is a reality for most people – be sure to take the right steps to get the best interest rate you possibly can. That way, you can spend a little more on upgrades for your new wheels!