How to Get the Best Auto Loan Rates

Posted in Auto Loans • August 12, 2013

best auto loan rates

It’s hard enough finding the car of your dreams; it’s even tougher to figure out if you’re getting one of the best auto loan rates available for that dream car. But ensuring that you get the lowest interest rate out there can have a great impact on your overall financial health.

The trick is to figure out how to get the best car loan rates. Unfortunately, this isn’t an overnight process. The first step is to understand what factors impact the rate you finally get offered.

There are essentially three factors that come into play: credit history, the term of the loan and the loan-to-value of the vehicle.

1. Credit History

This is the big one. Credit history will have the largest impact on the rates you are offered. The best auto loan rates are advertised with good-credit borrowers in mind. Falling short of these standards will cause the rates you are eligible for to be much less appealing.

Despite what a lot of credit repair companies say, there is no quick fix to bruised or damaged credit histories, but you can take some immediate steps to pay off debts and get everything in your credit file up to date. After that, it is simply a matter of time and consistency to ensure that you once again are getting the best car loan rates.

2. Term of Loan

The shorter the term, the lower the rate. Keep this in mind when you are purchasing a new vehicle. The balancing act here is making sure you can afford the payment. A two-year loan rate may seem attractive, but if the payment is too much to handle, run away from it. That said, if you feel you can swing a three-year payment instead of a five-year payment, paying less over the life of the loan could be worth a short-term loan.

3. Loan-to-Value

This is more black-and-white than the first two factors. Typically, a lender will identify some sort of cut off with regards to loan-to-value, and all loan requests that fall over that mark will be subject to higher rates. Coming up a with a larger down payment can help keep you under that line.

As a final tip, always get financing beforehand. Even if you end up going with dealer financing, it will you leverage.

 

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Best Auto Loan Rates

Institution
Best Rate (APY)
SCE Federal Credit Union
0.75%
1 Year New Auto Loan
Nymeo FCU
0.99%
1 Year New Auto Loan
Self Reliance FCU
0.99%
2 Year New Auto Loan
Rates are current up to 30 days, verify rate through institution site. Data compiled from the GoBankingRates.com interest rate database and Informa Research Services, Inc. The accuracy cannot be guaranteed.
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