Shopping for the best auto loans? Whether you are looking for the best car loan rates for a new or used vehicle, or you want to refinance an auto loan, we can help. Today's auto loan rates are displayed in our helpful car loan calculator. Get the lowest rate when you compare rates from multiple lenders, even if your credit isn't perfect.
The single most important thing you can do to save money on an auto loan is to shop for the best auto loan rate before you set foot in a dealership. By knowing what kind of rate you qualify for before you try to buy a vehicle, you accomplish three things:
As you shop around for financing on a new or used vehicle, keep in mind the following factors that will affect your payment:
Many buyers are opting for car loans that are five years or longer. Experian notes that in the last quarter of 2012, the average car loan length was 65 months. That's almost five and a half years! The advantage of a longer car loan is that your payments will be lower. The disadvantage is that you may be "upside down," - you owe more than the vehicle is worth - for a longer period of time.
A larger down payment will reduce the amount you borrow and may make it easier to qualify for a better car loan rate. If you haven't saved much for a down payment, you may be able to sell your current vehicle and use that money toward the down payment, or trade in your current vehicle to reduce the price of the car or truck you are buying. But if you are short on cash, don't panic. Not all lenders will require a down payment.
Your credit score will be used to help determine the interest rate you'll pay. But just because you have less than perfect credit, that doesn't mean you can't get a decent rate. The credit score that an auto lender uses may be somewhat different than the score you see if you get your own credit so don't get too hung on up the number.
Is your current auto loan rate higher than the rates you see in the loan rate comparison table above? If so, you may want to refinance your car loan. If you can get a lower rate, you'll save money and you may be able to pay off your loan faster, too. Another option is to extend your loan term to make your payments more affordable. It's easy. Just choose refinance from the options above and apply to see if you qualify for an auto loan refinance.
If you have credit problems and need to buy a car or truck, you may be tempted to just use a Buy Here Pay Here (BHPH) car dealer that advertises it makes bad credit car loans. With one of these arrangements, the dealership arranges the financing and usually you make your payments to the dealer rather than a third-party lender like a bank or credit union.
Before you go this route, make sure you try to get preapproved for a car loan online or with a local financial institution. If you can get financing elsewhere then you'll have more freedom to shop for the best deal on your car from a variety of sources, rather than limiting yourself to the cars available at that dealership. And when you do find a car or truck you like, you'll be able to try to get the price down, rather than taking whatever they offer you.
Keep in mind that even if you are offered a high-rate auto loan online or through your bank or credit union, you can always ask the dealer to beat that rate - after you have negotiated the price for the vehicle you want.
Every time a lender checks your credit or requests your credit score, that fact will be noted on one or more of your credit reports as an "inquiry." Your credit score can drop as a result. The good news is that most credit scoring models will ignore recent auto-related inquiries, and will count multiple inquiries from auto loan applications in a short period of time as one. To protect your credit, it's best to shop for an auto loan in a focused period of time: two weeks or less is best to be safe.
You can check your credit score for free using Credit.com's free Credit Report Card. Requesting your own credit score through this service will not affect your credit score.
If you are desperate to borrow money but you have bad credit, you may be tempted to get a car title loan. These loans require you to pledge your vehicle as collateral for the loan. They are not legal in all states, but where they are, they usually lend up to 25% of the value of the car or truck you own free and clear.
Watch out! Interest rates on auto title loans are very high; often 25% per month - or about 300% per year - according to the Center for Responsible Lending. According to the CRL report, the average car-title borrower renews a loan eight times, paying $2,142 in interest for $951 of credit. If possible, you should try instead to get a personal loan or, if you can't, see whether a non-profit credit counseling agency can help you find another solution to your financial difficulties.
1. MoveCU disclaimer: APR = Annual Percentage Rate. Rates based on credit worthiness and are subject to change without notice. Your actual rate and monthly payment may vary. Must be 18 years of age or older to apply. Loans subject to credit approval and credit union membership.
* IMPORTANT NOTE FROM CREDIT.COM: Credit.com is not a lender. The above offers are provided by third-party lenders from whom Credit.com receives compensation. Credit.com will not call you about any loan application resulting from the above offers, and will not ask you over the phone, via email or otherwise for financial information or other sensitive personal data.
REMEMBER never to share any financial information or other sensitive personal data over the phone or via email without independently confirming the identity of the company calling first!
† Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom Credit.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). It is this compensation that enables Credit.com to provide you with services like free access to your credit scores at no charge. Credit.com strives to provide a wide array of offers for our members, but our offers do not represent all financial services companies or products.