Tips and tricks for great auto loan rates
Before you get caught up in finding the best auto loan rates, you need to figure out how you're going to pay for your auto loan.
You could go to a bank or credit union. The main advantage of securing financing from one of these places is that you can get the loan approved before you go to the car showroom. Plus, they usually offer the lowest auto loan rates.
Dealers offer financing, of course. While it is possible to get a good deal on a new car loan from the dealer, these situations aren't predictable. The only way to find the best deal on auto loan rates is to comparison shop.
Careful with financing
You have to be careful when financing an auto loan at dealerships, though. They often put a low price on the windshield so they can make their money back when they finance the car. So be sure that you know how much you're paying and why, with no exceptions.
You also have the option of financing your car purchase with a home equity loan. You'll most likely get a great interest rate. Plus, you can deduct the payments from your taxes.
Don't forget that the longer the loan the more money that will be coming out of your pocket. You might see loans that last 72 or 84 months. Run away from these as fast as you can. The interest rate on these kinds of loans will be a lot higher than a 60-month loan.
In your search for auto loans, you also might encounter zero percent financing. These deals basically amount to free money. But you have to be careful because there are strings attached to almost all of these offers.
The real cost of zero
For instance, you'll most likely have to agree to a loan term of three years or less. That translates into some pretty hefty monthly payments. Plus, some zero percent offers require you to put down as much as 25 percent.
You should start your search for the lowest auto loan rates at Bankrate.com. You can compare rates on a car purchase or refinance.
When you decide the term of the loan and where in the country you're looking, you'll see rates from several places in your area. You can see the fees and conditions that will apply to those auto loan rates and even get the phone number to call for more information.
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