3 Ways to Obtain the Lowest Interest Rate on Your Auto Loan

On average, Americans change their cars every five years. Most of the people apply for auto loans when they decide to buy cars, vans, SUV, or trucks. Since the interest rate on car loans adds up quickly especially on long term loans (5 or 7 years), it is extremely important to get the lowest possible rate.

You should shop for the lowest interest rate possible before shopping for the vehicle itself. If you buy the vehicle first, the dealer will keep pushing dealer financing on you because he/she wants to increase his/her bottom line. The interest rate of bank financing is usually 3% less than that of the dealer financing, credit union, or an online company offering loans. So, it is advisable to shop for the loan before shopping for the vehicle. Moreover, this increases your power of negotiation since you prove to the dealer that you have financial stability and know the going rates. Furthermore, knowing the current rates for auto loans helps you differentiate between good deals and bad ones.

You can call local banks, search the internet, ask family members and friends about the going interest rates on auto loans. You should compare side by side and consider factors such as long term loans, since long term loans usually require lower interest rates. Your credit history affects your interest rate also. Obtain as much quotes from different lenders, online loan companies, and credit unions as possible. Compare the fees, rates, and terms of at least three or four different quotes. By telling different lenders that you have received better offers, they would probably compete for your business by lowering your interest rate or dropping some of your fees. A lot of online companies allow you to get quotes from different lenders at one time which is very good if you want to avoid exposing your credit report multiple times.

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