How To Get Low Rate New
And Used Car Loans
Right off the bat ... try to stay away from traditional Car Dealership loans! Yep ...they're the most likely to put a much bigger dent in your wallet. Most car buyers don't realize that Car Dealers not only pocket a nice profit on the car, but also ring up big extra profits on the financing. It's a double whammy on the unaware.
In fact, when the car business is slow, it's not unusual to be able to negotiate a very good purchase price. But these "best deals" are only offered if you finance your loan through the Dealer. In other words, they're sometimes willing to make nothing on the car itself because the profits on the loan make it worth their while. This just goes to show the magnitude of the extra interest charged to the buyer and then kicked back to the Dealer. Look out!
Even new car, 0% loans are usually a bad deal. The problem is, these deals are only offered if you finance through the Dealer (even if you are lucky enough to have the very high credit score necessary to qualify). How can 0% be bad? Because usually you can only get it by giving up a large discount of some kind. For example, you're forced to choose between a 0% loan or a $3,000 discount. You can't have both. Do the math. Your total payments will almost always be less by taking the discount and getting a traditional loan, often by a large amount. 0% loans may sound good, but they're just a way to get the buyer to sign the dotted line.
That said, we know a Dealer loan is often the most convenient since you're usually right there already. And it is still possible to get a decent loan from a Dealer, but you must be knowledgeable to hold their feet to the fire to get a better rate. It's just super important to your pocket book that you first research rates before going to the Dealer. And you absolutely must get a free credit score to avoid a lot of hocus-pocus rate justifications from the Dealer (see more on this below).
Our Pick For New Or Used Car Loans?
Well, it varies. Interest rates are always changing and therefore, so is the list of the lowest rate lenders. That's why it's essential to your financial health to get rate quotes from many competing lenders before making your loan decision. That's also why we recommend MyAutoLoan.com where you get free, no-obligation rate quotes from the lowest rate providers within minutes. Then all you need to do is compare and choose.
This process is also an excellent time saver because you don't have to contact one lender after another and submit multiple applications.
In addition, both of these loan quote services may also be able to help people with less than perfect credit.
And please remember to do this before you actually buy the car. This way you'll be all set when you're ready to make your final vehicle decision. Actually, you can secure your financing a month before you eventually buy your vehicle.
Another excellent loan source are local Credit Unions. Their rates can sometimes get close to online lenders and they're almost always better than traditional banks. Again, no fees and no Dealer participation means your monthly payments are as little as possible. Most Credit Unions will allow you to join for under $5, so pull out those Yellow Pages.
And don't forget your Home Equity Loan, if that's available to you. Those rates are usually very good. And it's all tax deductible ... another big plus.
If none of these have worked for you, your next best bet is your own bank. Their loan rates will likely be a little higher than the others, but because you're a customer there already and have some sort of known history with them (checking or savings account), you're more likely to get approved. Again, theres no extra fees or points being pocketed by the Dealer.
Also, Know Your Credit Score!!!
This is critically important because your interest rate should accurately reflect your credit history. A difference in just a few percentage points can cost you literally thousands of extra dollars needlessly over the life of your loan.
First, you need to know your credit score to verify that the interest rate being proposed to you isn't too high. And secondly, you need to look over your credit report to check for mistakes, which sadly happen way too often. I've seen even little mistakes knock off 100 points and more from someone's rate which they never even knew about, costing them bigtime on their loans ... and all avoidable.
For many years, consumers had no access to their credit scores. But due to strong consumer group pressure, this has finally changed. You can get your free credit score here (in a matter of seconds, actually).
But What If You Have Really Bad Credit?
If your credit is less than stellar, well ... even if its downright awful and the above sources may not be able to help you ... it would be a good idea to get quotes at InstantCarLoan.com as well. They specialize in this kind of loan and will find you the best one available. As they say, "Bad Credit? No Credit? Accepted."
It's also especially important for people with credit issues to know their scores and check their reports for errors. There's big money for lenders in the subprime loan segment and you'll be much better off personally knowing how you stand.
So, do some shopping out there. Depending on the loan amount, being a smart loan shopper will save you at least hundreds, if not thousands, of dollars.
And checkout our Facebook page for more tips, car news and fun.
Happy Money Saving! - Josh
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