Comparing New Auto Loan Rates: What Smart Shoppers Know

Part of buying a new car often involves applying for a new car loan, and that means comparing new auto loan rates.  By doing a bit of homework before you apply for your loan, you can be sure you are getting the best possible rate for your loan. 

Being Sure You're The Best Borrower You Can Be

Before you begin your car or loan search, take a look at your credit record.  Your credit history has a great impact on the rate of your new loan.  The higher your score, the lower your rate.  Many times, your credit score may be affected by easily-corrected mistakes on your credit history.  It’s a good idea to periodically check your credit history.  You can fix any errors.  Remember to take a look at your report before you shop for a new car to ensure that you get the best rate.  You should check your credit about 60 to 90 days before you begin your car shopping. This gives you time to contact your creditors and correct erroneous credit history.  All corrections will take time to show up, so give yourself plenty of time. 

You may also qualify for special offers.  Military personnel, for example, may qualify for lower rates on their auto loan rates because of their enlistment status.  Many banks also offer special interest rates to recent college graduates.  Be sure you read all the terms of any such “special offer” carefully to confirm there aren’t any hidden charges.

Checking All Available Interest Rates

Right before you shop for your loan, check the current prime interest rate.  The prime interest rate is the average interest rate all banks charge their customers on any loans; the Federal Government will often adjust the rate to regulate the economy.  When the prime interest rate is low, many lenders rates are low giving you more of an opportunity to get ang a low rate.  Also, knowing what the prime rate is can give you a better idea of where rates are when you compare different lender's rates.

There are many sites on the Internet that allow you to compare rates.  Even if you plan to use a particular dealership’s financing plan, it’s a good idea to take a look at other offers to get a general idea what rate you could qualify for.  You can negotiate with the company you have in mind, or simply walk away from a bad deal because you will be informed about your options.

Don’t be afraid to shop around.  Auto manufacturers will compete with each other to give you the best rate.  Sometimes even different dealerships working with the same manufacturer may also compete with each other. You may also want to consider a loan with a credit union since their rates tend to be lower than many dealerships offers.

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