Car loan interest rates can be a mess to handle when they get too high, and the worse your credit is, the higher they will be. There are some secrets of the trade though that may help you get the lowest car loan rates possible for you. Consider the guide below to potentially lower your current car loan rates and get better ones for the future.
Dealers have to make a profit on any loans they put out, so their rates are usually higher than others. Their whole goal is to sell a car and make money, so you'll want to avoid going through them if you can.
Another thing to be careful of are those 0% loans. The main reason for this is that these are only offered to the buyer if they finance through them. The reason why these loans are bad is because you are generally asked to give up a relatively large discount. For example one dealer might offer a 0% loan or say a $2,500 discount. The buyer simply can’t have both. The discount will lower your payments, and a 0% loan will only raise your payments. This may also be an introductory rate too, so you need to be aware of the rates you would pay for the full loan.
It is always a good idea to get a variety of different quotes from different types of lenders and make sure the quotes are in writing. This way you have proof of the different quotes when you are working with a dealership. To save time, you can always one of many different free rate quote services that will take your information and submit them to different online lenders for you. Online lenders tend to have lower rates than others.
Another great way to go about trying to get a good loan with great interest rates would be checking out your local credit unions. Credit unions can sometimes give the buyer similar rates as the ones offered by the different online lenders and are definitely better than your local bank. Since there are no extra fees or dealer participation, you'll see lower payments each month. A lot of credit unions will actually let you join for less than five dollars.
If none of this works for you, it is still better then to try and go to the bank that you have your account with. Even though they will be higher than a credit union, they will still be far lower than going through the dealership. Since you are a customer and they already sort of have a history on you, you will more than likely be able to get a loan from them.
If you can't get a new loan, you can always look at lowering the payments on your old one. Do another set of quotes for the amount of money you currently have out on the car you are driving, and see how much you may save in refinancing. This will lower your monthly payments, but it may extend the length of your loan. Assess all of your options and you should find a solution.
