Shop around for the best auto loan rates

Most people wouldn't buy a car without a test drive, but far fewer put their auto loan rate to the test.

Don't idly accept the first rate that you find. Shop around to find the best deal in town. Whether you're looking to refinance with lower auto loan rates or want to pick up a brand new auto loan, it pays to do your research.

Go Green

Many banks and credit unions offer lower auto loan rates for those who purchase fuel-efficient cars or hybrids. Incentives such as a 0.5 percent discount on the auto loan interest rate are available at some banks. Before purchasing, make sure to research individual institutions; the definition of a "green" car can vary. Each bank or credit union may have special criteria for giving out green loans.

Refinance with your lender

If you're looking to refinance your auto loans, your best option may be to contact your current lender. They may offer you lower auto loan rates because you're already a paying customer. If they do offer a lower auto loan rate, continue to shop around for the best one available. Use Bankrate's auto loan rates comparison tool to research for the lowest rates in your area.

Modify for lower auto loan rates

If you've recently been laid off or can't pay your car loan at the current auto loan rate, your lender may suggest a loan modification. It's in the interest of the lender to keep you paying your loan off at a lower rate rather than defaulting. In the case of an auto loan rate modification, be prepared to provide documentation including a hardship letter, pay stubs, bank statements, W-2 forms, tax returns, proof of insurance and a financial-assistance application.

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