Tips For Figuring Out Where To Get A New Car Loan
It isn't usually a good idea to just go to the dealership and accept whatever terms and interest rate they offer for a new car loan. Doing a bit of homework ahead of time can get you into a better position to bargain and potentially a better interest rate for your new car loan.
Check With Your Local Credit Union
One of the first places you may want to check when searching for the best deal on a new car loan is a credit union. The rates at credit unions are often at least 1 percent less than at regular banks. Even better, credit unions take more into account than just your credit score, so it can be easier for people with less-than-stellar credit scores to still get a decent interest rate.
Check Online
It's also possible to get a good idea of what rates are being offered by checking out a few loan and bank websites. This takes very little time, and you can even apply for preapproval, which means you'll have a total amount and interest rate for a potential loan in hand when you go to the dealer. You can use this to negotiate with the dealer to perhaps get an even better deal. Even if you don't get preapproved, you'll have a good idea of what rates local banks are offering so you'll be less likely to accept an unattractive deal offered by the dealership.
Car Choice Matters
Keep in mind that if you've got good credit, typically 750 or above, you may qualify for the special deals with 0 percent financing offered by the dealer on certain cars. These are usually cars they have too many of on the lot and change frequently. If you happen to want one of these cars, these deals can save you a lot of money over the term of the loan.
Other Tips
While it's tempting to get the most expensive car you can afford the monthly payment for, this isn't usually the best idea. It might mean a longer-term loan, which means more interest and makes it more likely you'll wind up underwater on the car loan if something happens to the car. Opt for the shortest car loan term you can afford, as this minimizes the overall cost of the loan, although it will involve higher monthly payments. The overall cost of the loan is what you should be comparing, not the monthly payment. Paying any fees with cash instead of rolling them into the loan is another good idea if you can afford it, as is putting as much down as you can at the time of purchase. A down payment of at least 20 percent limits the risk that you'll wind up paying for the car even after it's gone.