Auto Loans: How to Find the Best Rates

Before you look into auto loans, you should first look up your credit score. In general, the higher your credit score, the better terms you’ll be able to get from a lender. If you’re worried about your credit score being low, take some time to improve it. You may be able to raise your score by paying off credit cards or reporting errors on your credit report — remember that you’re entitled to a free credit report every year from each of the three major credit bureaus. 

Many institutions offer auto loans, and it’s best to compare rates from several different types. Major national banks, such as Chase and Capital One, are among the largest lenders, but the auto companies themselves also provide loans through their finance departments. Local credit unions and finance companies may also have attractive terms. Whether you’re a customer of one of the big banks or a smaller local institution, if you’ve been banking with them for a while, it’s a particularly good idea to check your bank’s rates first; many offer special lending deals to their existing customers.

Once you’ve got your car picked out, your financing lined up, and you’re ready to buy, you might find that not all deals are created equal. The offer you get from one dealer may pale in comparison with the offer from another. One piece of advice is to tell a salesperson that you’re ready to buy that day, which can make it easier for them to justify giving you the best discounts possible. You can then take that offer to another dealer to see if they will beat it. Finally, once you’ve gotten your best deal, be sure to read all documents before you sign on the dotted line — mistakes in the paperwork may cost you money.