The best car loan rates require that you do a little digging. It’s not a lot of effort, but it will take a bit of time. When you’re looking for the best car loan rates, here are some tips on where to go to find rates that can save you money.
1. Check your credit score – Before you do anything else, get a copy of your credit score and credit report. You can obtain one free credit report every 12 months from each of the nationwide credit reporting agencies through AnnualCreditReport.com. Thoroughly review all items on your credit report and make any necessary corrections with the agencies directly. Pay a few dollars to get your actual credit score. This may seem like an extra expense, but it’s worth it.
2. Low interest rates have a qualifier – To get the best car loan rates from lenders, you have to have top-tier credit. This is why you pay a few dollars to get your credit score. If you’re in the 750 and higher range, you’ve got excellent credit. If you’re somewhere in the 500 to 600 range, you’ll be paying higher interest rates.
3. Shop banks and credit unions – It’s a no-brainer, but it’s amazing how many people neglect to check with their local banks and credit unions to see what kind of interest rate they can get on car loans. One caution is to always find your best interest rate before you go to the dealer. If not, you’re setting yourself up for some potential high-pressure tactics at the dealership’s F&I department – and possibly a much higher interest rate than you could have gotten on your own. This isn’t always true, but it may be. So, it’s better to be prepared by having your own financing pre-approved.
4. Check dealer special interest rates – Some dealers have access to special interest rates or loan terms that aren’t nationally advertised. It always pays to ask about special rates when you begin to discuss financing.
5. Comparison shop interest rates – Use the Internet to help you quickly compare interest rates at a number of different lenders. One source to check is Bankrate.com. Click on the Purchase and choose term (36, 48, 60 month or all loan products). On the page that displays, enter your state and city or zip code and choose term. The results page will display the currently available interest rates for the term you’ve selected. There’s also a calculator that can help you see what your monthly payment would be with various interest rates and terms. Also check the low interest rate auto financing calculator.
For more tips on auto financing, visit our section on Car Loans where you can get additional tips and loan quotes from multiple lenders.