3 Tips for Best Car Loans
Updated October 6, 2023
When you’re looking to buy a new car, knowing the various loan types available and who or what they’re best for can go a long way toward improving your bottom line. The aim of this article is to compare these top auto lenders to discover the types of rates you are eligible for.
How are these products chosen?
When seeking out which car loan has the best deal, one must first ascertain the legitimacy of each lender, their web security, and business practices. The next step is to analyze and consider the APRs, loan terms, funding speed, borrowing amounts, down-payment prerequisites, and the application process of each lender.
8 best auto loans from reliable dealers:
- Best for high-priced cars: Wells Fargo
- Best for competitive rates: Consumers Credit Union
- Best for same-day funding with low rates: LightStream
- Best for comparing multiple offers: LendingTree
- Best for an online car purchase: Carvana
- Best for bad credit: car.Loan.com
- Best for older used cars: MyAutoLoan.com
- Best for financing after a financial setback: Auto Credit Express
Determining the average rate for a car loan
Car loans can come with rates as low as 2% in some cases. However, there are several factors that determine the rate you qualify for. These factors include the following:
- Credit score: The best rates go to borrowers with the best credit score.
- Income: The higher your income, the more likely you are to get a good deal.
- Debt-to-income ratio: Having regular monthly expenses worth 20% or less than your income can also get you a better deal.
- Car type: New cars typically come with lower rates than used cars.
- Loan term: Often longer loan terms come with higher rates — especially at credit unions.
Finding a car loan with a good rate
Here are some key points needed in finding a good deal on your next car loan:
- Consider a newer vehicle: New car loans come with lower interest rates because the lender is taking on less of a risk. Most new car loans usually allow you to secure a vehicle that’s less than two years old, although some may only be for cars that haven’t been previously owned.
Apply within 45 days. In a case of multiple car loan applications, ensure to keep your applications within a short period — typically no more than 45 days. This is being counted by most credit bureaus as one line on your credit report; hence, saving your credit score from dipping every time you fill out an application.
- Get preapproved: The easiest way to avoid an inquiry is to apply for preapproval. For most lenders, you can get an estimated quote without running a hard credit check.
Note all of your assets in your application. In a situation where you have a substantial sum of money to fall back on, you will be provided lower interest rates; although, this is applicable to some lenders.
- Borrow less than you’re buying the car for: Having a down payment or trade-in can make you eligible for a lower rate if a lender sees you don’t need to borrow 90% of the purchase price of the vehicle.
- Compare your options before you apply: Comparing offers from different car loan providers they can help you find the lowest rate available to you. If you do not want to do this yourself, you can consider using a car finance broker or online connection service.
If you would like to know more about how you can get the best car loan deals, please visit this link: best car loans.