Getting the best rates on a new car loan is one of the biggest keys that can help buyers come out with an affordable payment, yet it is a detail that many of us overlook when we sign that paperwork. Some buyers do not even realize that they can arrange their own financing and are not required to get financed through the dealership. Sometimes, of course, it is most advantageous to work with the dealer’s financing arm, particularly when there are subprime offers on the table and your credit score qualifies you to capitalize.
Saving Money on Auto Financing
But sometimes it is better to hunt down those great deals on your own. Generally speaking, auto manufacturers try to do what they can to make their finance offers as affordable as possible, because they do not want to lose customers over high interest rates. This is one area of competition among the manufacturers that buyers really only pay attention to when zero percent interest rate offers come into play. But saving money on your auto financing is something that can knock off thousands in interest over the course of your loan even when zero percent interest isn’t being offered.
The interest rates that are out there at any given time are not as closely tied to the Fed as home mortgage interest rates, for example. They are more closely tied to the market’s ability to sustain sales, so in slower times they might be lower just as a means of getting customers on that showroom floor. This is usually the best time to be a buyer, because you can often see subprime lending rates from a range of sources, but don't be fooled by common auto insurance problems. In many cases these rates might be tied to a manufacturer promotional offer, such as during a model year clearance event, for example.
Dealer Rebates and Auto Loans
There are many times when shopping around for the best deal has to include looking at different dealers, even if you are set on the make and model you want to buy. That’s because some dealers have more leverage with lenders than others, and thus are better positioned to offer their customers lower rates. This is particularly true for very well qualified buyers, those consumers with a sterling credit rating. There is much more of a reward for your great score when you are able to secure subprime interest status, and there are often dealers that can pull this off even when manufacturer based interest incentives are not there.
Lending Institutions and Car Financing
Of course, consumers also need to consider the possibility that they’ll have to bring their own financing to the table when they buy a new car. This is a lot easier to do than you might think. You can check on current loan rates online and get a good look at what local banks and credit unions are charging their customers for auto loans. Keep in mind that bank and credit union customers (those who have savings and checking accounts with the institutions) can often score the lowest rates. And setting up automatic payment withdrawal can sometimes earn you an extra discount.
Take a look at all of your options for finding the best rates on new car loan and do not take it for granted that your dealer can connect you with the best price. The most sensible strategy is to simply look around for the best deal among lenders before you ever set foot on that showroom floor, so that you already know the rate that you’re trying to beat.