How to Find the Best Auto Interest Rates
24 Apr 2017
Auto Interest Rates
Even with an increasing amount of Americans opting to use public transportation and rideshare options such as Uber, the need to own your own vehicle still remains prominent. Statistics show that 91% of US households own at least one car, with the majority of citizens requiring a car to get to and from work. Statistics also show that nearly 85% of those who buy a new vehicle finance it through either a loan or a lease.
When acquiring a loan, most become subject to high interest rates and unnecessary fees. Why? The vast majority of car buyers choose the convenience of financing through the dealership, which have a markup of 2.5% on average. So, where can you go to find the top car loan interest rates?
Choosing a Separate Lender
Aside from the average markup, dealerships tack on additional fees that you will also end up paying interest on, as well as attempt to get you to finance various add-ons for the vehicle. Instead, opt to acquire a loan through your bank, a credit union, or an online auto lender. Each offers their customers a wide variety of beneficial features and favorable terms.
Online sites are a powerful tool when selecting a lender, as they allow you to view their track record, customer experiences and satisfaction ratings, pros and cons, and even compare different lenders side by side. The best companies will offer online tools such as payment calculators helpful FAQ’s, instant or same day approval, refinancing options, and loans for both new and older cars. Plus, you are more likely to find better rates regardless of your credit.
Speaking of credit, it is always best to know your credit score before applying for a loan. Using a site like Credit Karma, you can view your current score for free to have a better idea of the types of rates you can expect. If you find that your score could use a little help, paying off any outstanding loans or bills can give it the boost it needs to open up new opportunities for better payment plans.
Tools of the Trade
The internet is crammed full of useful tools to help you secure the best deal. After viewing your credit score, make use of a loan calculator to gain a good idea of what your monthly payments would be and the total amount of interest you would end up paying. This way, you will know when a lender is offering something less than what you truly deserve.
We are all presented with a few decisions when choosing an auto loan, one of them being the length of the loan term. Sure, a lower monthly payment may sound ideal, but that choice also comes with more interest accrued over time. Take a good look at your monthly budget, and see if there is anything you could cut out to make a larger monthly payment on a shorter term possible.
The choice between a fixed or variable rate loan is another popular one. Once again, the variable rate may tempt you with an initial lower payment, but keep in mind that the interest rate will change over time based on an index, often leaving you paying far more than you initially bargained for. If you can lock in a low payment on a fixed rate, you’ll thank yourself in the long run.
Make sure to ask lenders about deals and incentives, as they aren’t usually advertised. Keep pushing for the best loan terms, and you’ll secure the best interest rate possible. Don’t succumb to the pitfalls of a terrible loan, take charge and get the loan you deserve!
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